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Full text of "To examine existing programs under the Public Works and Economic Development Act of 1965 and the Appalachian Regional Development Act of 1965 and to consider proposals to reauthorize the programs as well as new initiatives to promote growth and development : hearings before the Subcommittee on Economic Development of the Committee on Public Works and Transportation, House of Representatives, One Hundred Third Congress, first session, May 20, June 22, 24, July 20, 1993"

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\ TO EXAMINE EXISTING PROGRAMS UNDER THE PUBLIC WORKS 
AND ECONOMIC DEVELOPMENT ACT OF 1965 AND THE APPA- 
LACHIAN REGIONAL DEVELOPMENT ACT OF 1965 AND TO 
CONSIDER PROPOSALS TO REAUTHORIZE THE PROGRAMS 
AS WELL AS NEW INITIATIVES TO PROMOTE GROWTH AND 
DEVELOPMENT 

(103-27) 

Y 4. P 96/11:103-27 

To Exanine Existing Prograns Under... 

INGS 

BEFORE THE 

SUBCOMMITTEE ON 
ECONOMIC DEVELOPMENT 

OF THE 

COMMITTEE ON 

PUBLIC WORKS AND TRANSPORTATION 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRD CONGRESS 

FIRST SESSION 



MAY 20; JUNE 22, 24, JULY 20, 1993 



Printed for the use of the 
Committee on Public Works and Transportation 







m 4 



»S4 



'^^'^^^.^:^ 



TO EXAMINE EXISTING PROGRAMS UNDER THE PUBLIC WORKS 
AND ECONOMIC DEVELOPMENT AQ OF 1965 AND THE APPA- 
LACHIAN REGIONAL DEVELOPMENT AQ OF 1965 AND TO 
CONSIDER PROPOSALS TO REAUTHORIZE THE PROGRAMS 
AS WELL AS NEW INITIATIVES TO PROMOTE GROWTH AND 
DEVELOPMENT 

(103-27) 



HEARINGS 

BEFORE THE 

SUBCOMMITTEE ON 
ECONOMIC DEVELOPMENT 

OF THE 

COMMITTEE ON 

PUBLIC WORKS AND TRANSPORTATION 

HOUSE OP REPRESENTATIVES 

ONE HUNDRED THIRD CONGRESS 

FIRST SESSION 



MAY 20; JUNE 22, 24, JULY 20, 1993 



Printed for the use of the 
Committee on PubUc Works and Transportation 




U.S. GOVERNMENT PRINTING OFFICE 
73-118 WASHINGTON : 1993 

For sale by the U.S. Government Printing Office 
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 
ISBN 0-16-043274-X 



COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION 



NORMAN Y. MINETA California, Chair 



JAMES L. OBERSTAR, Minnesota 

NICK JOE RAHALL II. West Virginia 

DOUGLAS APPLEGATE, Ohio 

RON DE LUGO, Virgin Islands 

ROBERT A. BORSKI, Pennsylvania 

TIM VALENTINE, North Carolina 

WILLIAM O. LIPINSKI, lUinois 

ROBERT E. WISE, Jr., West Virginia 

JAMES A. TRAFICANT, Jr., Ohio 

PETER A. DeFAZIO, Oregon 

JIMMY HAYES, Louisiana 

BOB CLEMENT, Tennessee 

JERRY F. COSTELLO, Illinois 

MIKE PARKER, Mississippi 

GREG LAUGHLESr, Texas 

PETE GEREN, Texas 

GEORGE E. SANGMEISTER, Illinois 

GLENN POSHARD, Illinois 

DICK SWETT, New Hampshire 

BUD CRAMER, Alabama 

BARBARA-ROSE COLLINS, Michigan 

ELEANOR HOLMES NORTON, District of 

Columbia 
LUCIEN E. BLACKWELL, Pennsylvania 
JERROLD NADLER, New York 
SAM COPPERSMITH, Arizona 
LESLIE L. BYRNE, Virginia 
MARIA CANTWELL, Washington 
PAT (Patsy Ann) DANNER, Missouri 
KAREN SHEPHERD, Utah 
ROBERT MENENDEZ, New Jersey 
JAMES E. CLYBURN, South Carolina 
CORRINE BROWN, Florida 
NATHAN DEAL, Georgia 
JAMES A. BARCIA Michigan 
DAN HAMBURG, CaUfomia 
BOB FILNER, California 
WALTER R. TUCKER, California 
EDDIE BERNICE JOHNSON, Texas 
PETER W. BARCA, Wisconsin 



BUD SHUSTER, Pennsylvania 
WILLIAM F. CLINGER, Jr., Pennsylvania 
THOMAS E. PETRI, Wisconsin 
SHERWOOD BOEHLERT, New York 
JAMES M. INHOFE, Oklahoma 
BILL EMERSON, Missouri 
JOHN J. DUNCAN, Jr., Tennessee 
SUSAN MOLINARI, New York 
WILLIAM H. ZELIFF, Jr., New Hampshire 
THOMAS W. EWING, Illinois 
WAYNE T. GILCHREST, Maryland 
JENNIFER B. DUNN, Washington 
TIM HUTCHINSON, Arkansas 
WILLIAM P. BAKER, California 
MICHAEL A "Mac" COLLINS, Georgia 
JAY KIM, California 
DAVID A. LEVY, New York 
STEPHEN HORN, CaUfomia 
BOB FRANKS, New Jersey 
PETER I. BLUTE, Massachusetts 
HOWARD P. "Buck" McKEON, California 
JOHN L. MICA Florida 
PETER HOEKSTRA Michigan 
JACK QUINN, New York 



(II) 



in 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 

ROBERT E. WISE, Jr., West Virginia, Chair 

LUCIEN E. BLACKWELL, Pennsylvania, SUSAN MOLINARI, New York 

Vice Chair SHERWOOD BOEHLERT. New York 

SAM COPPERSMITH, Arizona THOMAS W. EWING, Illinois 

JAMES E. CLYBURN, South Carolina JENNIFER B. DUNN, Washington 

NATHAN DEAL, Georgia TIM HUTCHINSON, Arkansas 

JAMES A. BARCLA, Michigan WILLLVM P. BAKER, California 

BOB FILNER, California MICHAEL A. 'TklAC" COLLINS, Georgia 

JAMES L. OBERSTAR, Minnesota JAY KIM, California 

NICK JOE RAHALL II, West Virginia BOB FRANKS, New Jersey 

WILLL^M O. LIPINSKI, Illinois PETER I. BLUTE, Massachusetts 

JAMES A. TRAFICANT, Jr., Ohio JOHN L. MICA, Florida 

BOB CLEMENT, Tennessee PETER HOEKSTRA, Michigan 

JERRY F. COSTELLO, Illinois JACK QUINN, New York 

MIKE PARKER, Mississippi BUD SHUSTER, Pennsylvania 

DICK SWETT, New Hampshire (Ex Officio) 
JERROLD NADLER, New York 
PAT (Patsy Ann) DANNER, Missouri 
KAREN SHEPHERD, Utah 
ROBERT MENENDEZ, New Jersey 
CORRINE BROWN, Florida 
DAN HAMBURG, California 
NORMAN Y. MINETA, California 

(Ex Officio) 



CONTENTS 



Proceedings of: Page 

May 20, 1993 1 

June 22, 1993 77 

June 24, 1993 223 

July 20, 1993 411 

Summary of Subject Matter X 

MAY 20, 1993 

TESTIMONY 

Lee, R. Frank, Executive Director, Mason County Development Authority, 
Point Pleasant, WV 6 

Reese, Michael, Executive Director, Mohawk Valley Economic Development 
District, Mohawk, NY 6 

Smith, Craig M., Acting Assistant Secretary for Economic Development, U.S. 
Department of Commerce, accompanied by Steven R. Brennen, Director, 
Denver Reaonal Office, Economic Development Administration, John E. 
Corrigan, Director, Philadelphia R^onal Office, Economic Development 
Admmistxation, Joseph M. Levine, Chief Counsel, EJconomic Development 
Administration, David F. Witschi, Director, Economic Adjustment Center, 
Economic Development Administration, and David L. Mcllwaine, Director, 
Public Works Division, E!conomic Development Administration and Leon 
Douglas, Acting Deputy Assistant Secretaiy for Program Support, EDA 20 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Blackwell, Hon. Luden E., of Pennsylvania 3 

Costello, Hon. Jerry L., of Illinois 3 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Brennen, Steven R 41 

Corrigan, John F 42 

Lee, Frank 43 

Reese, Michael 46 

Smith, Craig M 47 

SUBMISSION FOR THE RECORD 

Notes from statements of presenters: 

Charleston, WV (4/23^3) 51 

Elkins, WV (4/23/94) 60 

Martinsburg, WV (5/24/93) 68 



JUNE 22, 1993 

TESTIMONY 

Adams, E.K., Executive Director, University Industry PubUc Partnership for 
Economic Growth (UnlPEG), Endicott, NY 98 

Gayheart, Linda G., Executive Director, Kentuc^ River Area Development 
District 98 

(v) 



VI 

Pkge 

Goodlatte, Hon. Bob, a Representative in Congress from Virginia 92 

Gubala, Timothy, Director of Economic Development, Roanoke County VA 92 

Jones, Hon. Brereton C, CSovemor of the Commonwealth of Kentuc^ accom- 
panied by Michael Wenger, States' Washington Representative, Appalach- 
ian Regional Commission 80 

Litvin, Stuart L., CED, Executive Director, Rodkbridge Area Economic Devel- 
opment Commission, Lexington, VA 92 

Patterson, David, President, Tennessee Technology Foundation, Knoxville, 

TN 98 

Robinson, Hon. James W., Chairman, Virginia Board of Housing and Commu- 
nity Development, Pound, VA 98 

VanKirk, Frea, Deputy Secretary and State Highway Engineer/Commissioner, 

West Vir^iia Department of Transportation, Division of Highways 98 

Wertz, E. Randall, Deputy Assistant County Administrator, Montgomery 

County, VA 92 

Whitener, Giordon, Vice President of Afarketing, Collins & Aikman Corpora- 
tion, Floor Coverings Division, Dalton, GA 98 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Blackwell, Hon. Lucien E., of Pennsylvania 79 

Molinari, Hon. Susan, of New York 78 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Adams, E.K 119 

Gayheart, Linda G 143 

Goodlatte, Hon. Bob 154 

Gubala, Timothy 156 

Jones, Hon. Brereton C 160 

Litvin, Stuart L 164 

Patterson, David 169 

Robinson, James W 176 

VanKirk, Fred 181 

Wertz, E. Randall 192 

Whitener, Gordon 194 

SUBMISSIONS FOR THE RECORD 

Adams, E.K., Executive Director, University Industry Public Partnership for 
Economic Growth (UnlPEG): 

Summary, "Appalachian Regional Commission in the Southern Tier East 
Region of New York" 125 

Planning Study, "Strategic Telecommunications Initiative", prepared for 
the New York State Southern Tier East Regional Planning Develop- 
ment Board and the Southern Tier Central Regional Planning and 
Development Board by Northeast Networking, Endicott, New York, 
Aprill993 132 

Overview, Working Draft of Proposals Under Consideration by the Tele- 
communications Exchange for Discussion at the Governor's Tele- 
communications Conference, prepared by Telecommunications Ex- 
change Staff, Division of Policy and Research, Office of Economic Devel- 
opment, Department of Pubhc Services, State of New York, June 1, 

1993 139 

Jones, Hon. Brereton C, Governor of the Commonwealth of Kentucky: 

Map of Distressed Counties in the United States, based on the 1990 
Census Povertjr Rates, 1990 "Market' Income, and 1989-91 Unemploy- 
ment, Appalachian Regional Commission, October 1992 91 

Resolution by the Governors of the thirteen Appalachian States rec- 
ommending continuation of the Appalachian Regional Commission 82 

Whitener, Gordon, Vice President of Marketing, Collins & Aikman Corpora- 
tion, Floor Coverir^s Division, Dalton, Georgia: 

Statement, The Dalton Plan: Industry and Education Working Together .. 201 

Dalton High School "Inside Track Program" Carpet Ceu^er Development 
Plan 202 

ADDITIONS TO THE RECORD 
Boucher, Hon. Rick, a Representative in Congress from Virginia, statement ... 216 



VII 

Page 

Strickland, Wayne, Executive Director, Fifth Planning District Commission, 
Roanoke, VA, statement 218 



June 24, 1993 

TESTIMONY 

Dell, Hon. Donald, President, Carroll County, Maryland Board of Commis- 
sioners, on behalf of the National Association of Counties 246 

Green, Dr. Kenneth, Executive Director, Eastern Panhandle Regional Plan- 
ning and Development Council, Martinsburg, West Virginia, on behalf of 
the National Association of Regional Covmcils (NARC) 228 

Koos, Philip D., Jr., Chief Executive Officer, Van Emmons, Senior Population 
and Marketing Analysis Center, Towanda, Pennsylvania, and President, 
Fhiblic Works and Economic Development 246 

Marinucci, Joseph A., Director, Economic Development Department, City of 
Cleveland, Ohio, on behalf of the National Council for Urban Economic 
Development 246 

McClure, Thomas, Director of the Economic Development Administration Uni- 
versity Center, Western Carolina University, Cfullowhee, North Carolina, 
and President-Elect, National Association of Management and Technical 
Assistance Centers (NAMTAC), accompanied by Stafford Thornton, Tech- 
nical Assistance Center, West Virginia Institute of Technology, Montgom- 
ery, West Virginia 228 

Padocco, Robert J., Executive Director, Mid-East Commission, Washington, 
North Carolina, and President, National Association of Development wga- 
nizations (NADO) 228 

Shmidman, Rabbi Morris A., Executive Director, Council of Jewish Organiza- 
tions of Boro Park, accompanied by Paul Chemick, Director of Operations, 
Council of Jewish Organizations of Boro Park, Brookl)na, New York, and 
Nanqr Carin, Director, Business Outreadi Center, Council of Jewish Orga- 
nizations of Boro Park, Brooklyn, New York 246 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Hoekstra, Hon. Peter, of Michigan 240 

Nadler, Hon. Jerrold, of New T^rk 245 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Dell, Hon. Donald 263 

Green, Dr. Kenneth 291 

Koos, Philip D., Jr 296 

Marinucci, Joseph A \. 314 

McClure, Thomas 1 325 

Padocco, Robert J 330 

Shmidman, Rabbi Morris A 352 

SUBMISSIONS FOR THE RECORD 

Dell, Hon. Donald, President, Carroll County, Maryland Board of Commis- 
sioners on behalf of the National Assodation of Counties: 

NACo Urbfm County Fiscal Survey: Executive Summary, Februanr 1993 . 269 
NACo Urban Coxinly Fiscal Survey: An Examination of the Fiscal Health 

of 66 of the Nation's Largest Counties, February 1993 272 

Rural America: Worth the Investment, sponsored by the National Asso- 
ciation of Counties, the National Assodation of Development Organiza- 
tions, and the National Assodation of Towns and Townships, report, 

January 13, 1993 276 

Padocco, Robert J., Executive Director, Mid-East Commission, Washington, 
North Carolina, and President, National Assodation of Development Orga- " 

nizations (NADO): 
Economic Development Digest, published by the National Assodation 

of Development Organizations Research Foundation, June 1993 337 

"How are regional development organizations helping 62 million rurail 
Americans build communities and create jobs", report, National Asso- 
ciation of Development Organizations 344 



VIII 

Paciocco, Robert J., Executive Director, Mid-East Commission, Washington, 
North Carohna, and President, National Association of Development Orga- 
nizations (NADO) — Continued Page 
Responses to post-hearing questions submitted by Representative Mol- 

inari 243 

Shmidman, Rabbi Morris A., Executive Director, Council of Jewish Orga- 
nizations of Boro Park, Brooklyn, New York, profile of the Business 
Outreach Center, Model for Community-Based Ek»nomic Development . 359 



JULY 20, 1993 

TESTIMONY 

Brown, Hon. George E., Jr., a Representative in Congress from California, 
accompanied by William Bopf, Executive Director, Inland Valley Develop- 
ment ^ency, San Bernardino, CA 426 

Broyles, Carolyn, Auditor, City of Heath, CA 455 

Catell, Robert, President and Chief Executive Officer, Brooklyn Union Gas 

Company, Brooklyn, NY 455 

Croach, Marilyn Cobb, Director of Operations, Defense Transition Services, 

Orlando, FL 455 

Condit, Hon. Gary, a Representative in Congress from California 426 

Deal, Hon. Nathan, a Representative in Congress fi:x)m CaUfomia 455 

Farr, Hon. Sam, a Representative in Confess from California, accompanied 
by Lora Lee Martin, Director of Science Development, University of Califor- 
nia, Santa Cruz 426 

Horn, Hon. Stephen, a Representative in Congress from California 424 

Lee, Barbara, Member, California State Legislature (16th District) 426 

Martin, Vernon D., AICP, Executive Director, Coastal Area District Develop- 
ment Authority, Brunswick, GA 455 

Radford, Ron R., Deputy Plant Manager, Westinghouse Electro-Optical Sys- 
tems, Orlando, FL 455 

Starbuck, Randy, Redevelopment Coordinator, City of Napa, C A 426 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Brown, Hon. George E., Jr., of California 428 

Condit, Hon. Gary A., of California 445 

Farr, Hon. Sam, of California 441 

Horn, Hon. Stephen, of California 425 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Bopf, William 475 

Broyles, Carolyn 485 

Catell, Robert 502 

Croach, Marilyn Cobb 507 

Lee, Barbara 547 

Martin, Lora Lee 551 

Martin, Vernon D 558 

Radford, Ron R 564 

Starbuck, Randy 568 

SUBMISSIONS FOR THE RECORD 

Brown, Hon. George E. Jr., a Representative in Congress firom California: 
Statement of Hon. Ron Dellums, a Representative in Congress from Cali- 
fornia 427 

June 18, 1993 letter, California Congressional Delegation to Hon. Ron 

Dellums, Chairman, House Armed Services Committee 430 

Filner, Hon. Floyd, a Representative in Congress from California, statement 

of Hon. Tim Nader, Mayor, Chula Vista, CA 421 

Hutchinson, Hon. Tim, a Representative in Congress from Arkansas: 

Recommendations presented by Judge Joe Gurley on behalf of the Blsrthe- 

ville Community regarding the closing of Eaker Air Force Base 414 

Statement of Hon. Katy Podagrosi, Mayor, Rantoul, IL, "Rantoul's Expe- 
riences with the Economic Development Agency" 417 



IX 

ADDITIONS TO THE RECORD 

Page 

Baker, Hon. Bill, a Representative in Congress from California, statement 669 

Barcia, Hon. James A., a Representative in Congress from Michigan, state- 
ment 666 

Feinstein, Hon. Diane, U.S. Senator from California, statement 670 

Frost, Hon. Martin, a Representative in Congress from Texas, statement 676 

Pelosi, Hon. Nancy, a Representative in Congress from California, statement . 681 



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MEMORANfDUM 

TO: Members, Subcommittee on Economic Development 

FROM: Subcommittee Staff 

SUBJECT: SUMMARY OF SUBJECT MATTER for a series of hearings to 

examine existing programs under the Public Works and Economic 
Development Act of 1965 and the Appalachian Regional Development 
Act of 1965 and to consider proposals to reauthorize the programs as 
well as new initiatives to promote economic growth and development. 



The Subcommittee's first hearing in the series will be held on May 20, 1993 at 
9:30 AM in Room 2167 Rayburn House Office Building. 
BACKGROUND 

The Public Works and Economic Development Act of 1965, which created the 
Economic Development Administration (EDA), was designed to provide federal 
assistance by which economically distressed urban and rural areas of the nation could 
be helped to foster economic renewal and growth, create permanent jobs and 
contribute to the national economy. The same year, the Appalachian Regional 
Development Act of 1965 was passed, creating the Appalachian Regional Commission, 
to help overcome the isolation of that Region and reverse the long-standing economic 
deterioration that had caused it to lag behind other sections of the nation. 

Programs administered by EDA have successfully helped many of the most 
economically distressed areas of the nation revitalize their physical and soaal 
structure and provide incentives to small and medium size business to grow and 



XI 



generate real jobs. The bulk of the funding assistance has been for public works and 
development facilities, providing an essential foundation to stimulate economic 
growth. Other programs provide administrative and technical assistance grants, 
including funds for university centers; planning grants to formulate and implement 
long-term strategies; funds for research projects and economic adjustment assistance 
grants, under Title IX, to help areas overcome long-term economic deterioration 
(LTED), as well as areas threatened or impacted by sudden and severe economic 
dislocation (SSED), such as military base closings, defense industry cutbacks, major 
plant closings, or disasters. 

The programs administered by ARC, with its unique federal, state and local 
partnership, have worked to alleviate jx)verty in the chronically-depressed 
Appalachian Region. About two-thirds of ARC's funds annually are allocated to 
complete the Appalachian Development Highway System, authorized at 3,025 miles, 
which is improving the delivery of social services, and opening up the Region to new 
business and industrial markets. The Commission also supports broad-range area and 
community programs that promote economic, social and physical development to 
improve the standard of living the Region's citizens. 

Status of EDA and ARC Authorizations and Funding 
Past Activity 

Authorizations for EDA and ARC expired September 30, 1982 in the 97th 
Congress. Since 1981, Administration budgets have called for termination of EDA 
programs and, until fiscal year 1991, for ARC programs as well. However, funding to 
keep both agencies alive was consistently supported in the House and the Senate 
through the budget and appropriations process, although at substantially reduced 
levels from peak amounts in 1980 due to budget concerns. 

In each Congress starting with the 97th. the Committee has reported out and the 
House has passed by wide margins bills to reauthorize the EDA and ARC programs 
and to revise them to better meet existing needs and changing national and worldwide 



xn 



economic conditions. No action was taken by the Senate until the 101st Congress, 
when the House-passed bill was amended and reported out of the Senate Environment 
and Public Works Committee in the closing days of the Congress. The bill did not 
reach the Senate floor for a vote before adjournment. 
Recent Interest and Activity 

The Administration's Budget for FY 1994 requested funding for both EDA and 
ARC. In March of this year. Secretary of Commerce Ronald H. Brown testified 
before the Appropriations Subcommittee on Commerce. Justice. State. The Judiciary 
and Related Agencies and stated that: "The Economic Development Administration 
will be a cornerstone for us, especially in areas that have been hit hard by the closing 
of military installations or the loss of military contracts that were the economic 
lifeblood of the area." He further stated that: "We will look to EDA to help 
communities create jobs in economically distressed areas and we will seek authorizing 
legislation for FY 1994." 

Last month, April 22, officials from EDA made the specific budget request for 
FY 1994 to the Appropriations Subcommittee - the first such request in 12 years. 
$30,151 million was requested for salaries and related exjjenses to support 355 
full-time employees, including 49 Economic Development Representatives (EDRs). In 
addition, $223,150 million was requested to provide grants for public works and 
development facilities and other types of economic assistance, of which $33 million 
would be allocated for defense economic investment grants. Officials proposed 
increasing amounts for the Technical Assistance Program and resuming funding for 
research and evaluation which had been eliminated in FY 1993. They reiterated the 
plan to seek authorizing legislation. Also, officials requested termination of4he Trade 
Adjustment Assistance Program, noting that assistance to firms and industries 
adversely impacted by imports could be provided through EDA's technical assistance, 
research and information programs as well as through other Commerce Department 
agencies. 



xm 



ARC officials testified, also in April, before the Appropriations Subcommittee on 
Energy and Water Development and requested a total of $189 million for FY 1994. 
$100 million would be for the Appalachian Development Highway Program; $85,616 
million for the Business and Human Development Program and $3,384 million for 
salaries and expenses. About 73 percent of the highway system miles have been 
constructed. The remaining cost to complete the system is estimated at $4,841 billion 
in Federal funds at 80 i)ercent of the remaining costs. 

The Public Works and Transportation Conrunittee. in its FY94 Views and 
Estimates Report to the Committee on the Budget in March of this year, had made 
budget suggestions for EDA and ARC on the basis of information available at that 
time. For EDA, the Committee recommended last year's level of funding of $244 
million plus an additional $33 million, which had already been identified in President 
Clinton's economic package for defense reinvestment and transition, for a total $277 
million. For ARC, the Committee suggested accepting the current Administration's 
proposed freeze for FY94 at the FY93 level of $190 million (which turned out to be 
$189 million). 
Need for legislation 

Over the years, EDA and ARC programs have served a valuable national 
economic and social purpose by helping local communities and regions address their 
economic problems. A great deal of good has been accomplished by these programs; 
however, there continues to be a need for this type of assistance. Economic 
disparities persist that affect the Nation as a whole, and economic changes - 
nationally and internationally - have had an uneven and challenging impact on 
regions, industries and workers. 

Now, with new support to reauthorize EDA and ARC. it is more important than 
ever that existing programs be examined and new approaches considered as part of 
the reauthorizing process. We need to know more about EDA and ARC strengths and 
weaknesses; which policies and programs best help state and local officials, 



XIV 



development experts and small business people meet their local economic needs and 
conditions and which tend to inhibit local efforts. 

Issues to be addressed that have been brought to the Committee's attention in 
recent years include: 

o Lack of sufficient funds, continuity of the programs and the need for 
multi-year authorizations; 

o EDA's lengthy application process — coordination with Regional Office 
and the role of Economic Development Representatives (EDR's)- suggestions for 
decentralizing the decision-making, reducing the paper work and making the 
guidelines more flexible - greater accountability at the local level. 

o The need for more technical assistance and the role of university centers 
under Title III. 

o EDA's Economic Development Districts (EDD's) and ARC's Local 
Development Districts (LDD's) - their use of planning grants and need for additional 
assistance for severely distressed communities. 

o The effectiveness of EDA's public works and development facilities 
program and the value of loan and loan guarantee programs. 

o The Title IX, Economic Adjustment Grants including an evaluation of 
the Revolving Loan Funds (RLF's); an examination of EDA's role in assisting with 
base closings and defense industry downsizing: and the program to assist communities 
affected by disasters; 

o Better cooperation among all Federal agencies and their programs in 
terms of guidelines and meeting requirements and criteria, possibly even to the extent 
of uniformity in grant application forms: 

o Broaden the authority under ARC for State agencies, when certified to 
manage another Federal agency grant program, to also be certified to manage ARC 
grant programs. 



XV 



Witnesses 

The first day of hearings will focus primarily on the Economic Development 

Programs. Witnesses will include officials from EDA. Washington, and from the 

Philadelphia and Denver Regional Offices. In addition there will be development 

experts from local areas - West Virginia and New York. 

Attachments 

To add to the background information on EDA and ARC, the following items 

are attached: 

o Programs of the Economic Development Administration 

o Appropriations Chart for EDA - Fiscal Years 1991. 1992 and 1993 

o EDA's January 11, 1993 notice from the Federal Register of the 

availability of FY 1993 appropriations. 

o Explanation of the Appalachian Regional Development Act of 1965 and 

Programs 

o Appropriations chart for ARC - Fiscal Years 1991. 1992 and 1993 
o Proposed witness list. 



XVI 



PROGRAMS 

OF THE 

Economic Development Administration 



Under the Public Works and Economic Development Act of 1965 
(P.L. S9-136) as amended 



[sc^al 



• Planning 

• Technical Assistance 

• University Centers 



• PubUc Works 

• Economic Adjustment 

• Revolving Loan Funds 



• Research & Evaluation • Business Loan Guarantees 

• Trade Adjustment Assistance 



'♦*"*"S 



U. S. DEPARTMENT OF COMMERCE 



XVII 



PLANNING PROGRAM FOR ECONOMIC DEVELOPMENT DISTRICTS, 
INDL\N TRIBES AND REDEVELOPMENT AREAS 

PROGRAM GOALS 

Grants and cooperative agreements under this program support the formulation and 
implementation of economic development programs designed to create or retain full-time 
permanent jobs and income for the unemployed and underemployed in areas of economic 
distress. 

PROJECT TYPES/RLIGIBLE APPLICANTS 

Planning grants for administrative expenses are awarded to establish and implement effective 
economic development programs at local and multi-jurisdictional levels. Eligible activities 
under this program include the preparation and continuation of an Overall Economic 
Development Program, and planning, implementation and technical assistance services to 
communities and local governments within the organization's jurisdiction. Assistance is 
normally provided for a period of 12 months, for up to 75 percent of the total project cost. 
Indian tribes may be provided assistance for 100 percent of the total project cost. 

Eligible applicants are Economic Development Districts, Redevelopment Areas, Indian 
Tribes, organizations representing Redevelopment Areas or multiple Indian Tribes, and 
commonwealths and territories. 

SELECTION CRITERL\ 

Among the factors EDA considers in evaluating proposals are economic distress of the area, 
past performance of previously funded grantees, and involvement of the local leadership in 
economic development activities. Priority consideration goes to currently funded grantees. 

FUNDING LEVELS 

District Program 

FY 91: $15,543,000 Average FY 91 grant: $58,000 

FY 92: $17,707,000 Range of FY 91 grants: $56,000 - $1 13.000 

Indian Program 

FY 91: $2,835,000 Average FY 91 grant: $43,000 

FY 92: $2,960,000 Range of FY 91 grants: $30,000 - $174,000 

APPLICATION PROCESS 

EDA regional offices contact currently funded grantees to inform them of procedures for 
submitting applications for continuation funding. All other potential applicants should 
submit a letter requesting funding and providing evidence of area economic distress to the 
appropriate EDA regional office with a copy to the area Economic Development 
Representative. Following review of the proposals submitted by current grantees as well as 
other entities, EDA will invite new applicants selected for funding consideration to submit 
formal applications. Average time from application submission to final decision is four 
months. Complete program information appears annually in the Federal Re gister . 



XVIII 



PLANNING PROGRAM FOR STATES AND URBAN AREAS 

PROGRAM GOALS 

Grants under this program help economically distressed states, cities, and urban counties 
undertake significant new economic development planning, policy-making, and 
implementation efforts. 

PROJECT TYPES/ELIGIBLE APPLICANTS 

Grants finance the administrative expenses to support significant economic development 
planning and implementation activities, such as economic analysis, definition of project goals, 
determination of project opportunities, and formulation and implementation of a 
development program. Assistance under this program enhances economic development 
planning capacities, continuous economic development planning processes and procedures, 
and helps build institutional capacity. A grant award under this program is generally for a 
period of 16 months. Two additional awards may be considered if funds are appropriated 
by Congress. The maximum Federal share is 75 percent of the total project cost. Eligible 
applicants are states, sub-state planning units, cities, urban counties within metropolitan 
statistical areas, and combinations of these entities. 

SELECTION CRITERIA 

Among the factors EDA considers in evaluating proposals are area economic distress; 
appropriateness of the work program to area needs; relationship of the proposed activities 
to the problems of the area's unemployed and underemployed population; and commitment 
of the chief executive. In the case of states, consideration is given to the innovativeness of 
the proposed project and the replicability of the process and/or results. 

FUNDING LEVELS 
State Program: 

FY 91: $1,890,000 Average FY 91 grant: $131,000 

FY 92: $1,973,000 Range of FY 91 grants: $50,000 - $200,000 

Urban Program: 

FY 91: $2,834,000 Average FY 91 grant: $107,000 

FY 92: $2,636,000 Range of FY 91 grants: $40,000 - $200,000 

APPLICATION PROCESS 

Potential applicants under the program should refer to the Federal Register notice 
announcing the program for information on submitting proposals. Proposals should include 
an indication of commitment from the chief executive, significant verifiable information on 
the level of economic distress (e.g., recent unemployment and income data), and a work 
program outlining specific activities to be accomplished under the grant. The original and 
a copy of the proposal will be submitted to the appropriate regional office with a copy to 
the area Economic Development Representative. Average processing time from submission 
of application to fmal decision is four months. 



XK 



LOCAL TECHNICAL ASSISTANCE PROGRAM 

PROGRAM GOALS 

Grants awarded under the Local Technical Assistance program are designed to assist in 
solving specific economic development problems, respond to developmental opportunities, 
and build and expand local organizational capacity in distressed areas. 

PROJECT TYPES/ELIGIBLE APPLICANTS 

In responding to specific problems and opportunities, a local economic development 
organization might focus on military base and industrial plant closings, on deteriorating 
commercial districts, and on technical or market feasibility studies. Other subject areas of 
current interest include export promotion, tourism development, technology transfer, skill 
training, minority enterprise, and economic development financing. 

Eligible applicants include public or private nonprofit national, state, area, district, or local 
organizations; public and private colleges and universities; Indian tribes, local governments, 
and state agencies. Other eligible applicants are private individuals, partnerships, firms, and 
corporations. 

SFI PmON CRITERIA 

Priority consideration for funding is given to proposals that: 

o benefit areas of severe economic distress; 

o lead to near-term (one to five years) generation or retention of private sector jobs; 

o are consistent with EDA-approved Overall Economic Development Program; 

o document strong local support in terms of Hnancial commitment, public and private 

leadership involvement (applicants must finance a minimum of 25 percent of the total 

project costs); 
o promote economic diversification; and 

o focus on distressed rural area and state and Federally designated enterprise zones. 

FLTNDING LEVELS 

FY 90: $660,000 Average FY 91 grant: $21,000 

FY 91: $960,000 Range of FY 91 grants: $5,000 - $35,000 

FY 92: $1,200,000 

APPUCATION PROCESS 

Potential applicants should contact the Economic Development Representative (EDR) for 
the area. The EDA regional office can provide information on contacting the EDR, who 
will explain the program and guide the applicant in submitting the proposal. The regional 
office screens all proposals before deciding whether to invite formal project applications. 
Time from receipt of a formal application to final decision averages between three and four 
months. Grants over $25,000 are subject to a more comprehensive review and require more 
time to process. Complete program information appears annually in the Federal Register. 



XX 



NATIONAL TECHNICAL ASSISTANCE PROGRAM 

PROGRAM GOALS 

Grants and cooperative agreements awarded under the National Technical Assistance 
program are intended to provide resources to intermediary organizations giving technical 
assistance to local, district, and state economic development organizations and tor national 
demonstrations of innovative economic development techniques. 

PROJECT TYPES/EUGIBLE APPLICANTS 

Types of proposals funded include newsletters and reports on new developments and success 
stories in rural and urban economic development; demonstrations of national significance 
in such areas as improving competitiveness, better use of private capital, tourism 
development and others. 

Eligible applicants include national nonprofit associations, research institutions, and others. 
Assistance will generally be for a period of 12 months and applicants must finance a 
minimum of 25 percent of the total project cost. 

SELECTION CRITERIA 

Priority consideration for funding is given to proposals which show: 

o potential usefulness to local, regional and state development officials and the private 

sector; 
o soundness and completeness of demonstration methodology and means of 

dissemination; and 
o value of proposed project in relation to cost. 

FUNDING LEVELS 

FY 90: 
FY 91 
FY 92 



$1,229,000 Average FY 91 grant: $78,000 

$929,000 Range of FY 91 grants: $27,000 - $150,000 

$976,000 



APPUCATION PROCESS 

Potential applicants should submit five copies of a concise proposal to EDA Headquarters. 
Proposals should include (1) the name and address of the applicant organization and the 
names, telephone and the fax numbers of executive and project directors as appropriate; 
(2) the amount of EDA funds sought and the applicant share; (3) a brief statement of 
purpose (that does not repeat the scope of work), a scope of work and work plan; (4) a 
detailed line item budget; and (5) an organizational capability statement. If a proposal is 
accepted, EDA will invite a formal application. Average processing time from receipt of a 
formal application to final decision is two months. Complete program information appears 
annually in the Federal Register . 



XXI 

UNIVERSITY CENTER PRCKIRAM 

pnnr.RAM GOALS 

Grants and cooperative agreements awarded under the University Center program help 
colleges and universities in using their own and other resources to address the economic 
development problems and opportunities of their service areas. 

ppnJFCT TYPFS/ELIGIBLE APPLICANTS 

Proposals funded under the basic University Center program must focus on providing 
technical assistance to clients outside the sponsoring institution. A limited amount of 
University Center initiated activity, such as applied research on general economic 
development issues, is permitted if approved as part of the work plan. Eligible applicants 
include public and private institutions of higher education. 

SFIfmON CRITERL\ 

Priority consideration for funding is given to proposals which: 

o focus on service areas with significant economic distress (EDA prefers a statewide 

service area. However, EDA will consider a service area which covers a substantial 

portion of the state's population or its geographic area.); 
o address the economic development needs of the service area; 
o complement, rather than replicate, the efforts of other technical assistance providers 

such as Trade Adjustment Centers, and Small or Minority Business Development 

Centers; 
o furnish evidence that the sponsoring institution will provide significant financial and 

nonfinancial support for the activities of the proposed University Center. 

FUNDING LEVELS 

FY 90: $4,757,000 Average FY 92 grant: $120,000 

FY 91: $4,757,000 Range of FY 92 grants: $104,000 - $124,000 

FY 92: $7,724,000 

APPUCATION PROCESS 

Institutions seeking initial funding for a University Center should send a proposal to the 
appropriate EDA regional office and a copy to the Economic Development Representative 
for the area. The proposal should describe the economic distress of the service area, the 
activities that will be financed with the EDA funds, and the relationship of these activities 
to the economic development needs of the service area. The Assistant Secretary for 
Economic Development will decide which institutions will be invited to submit formal 
applications. Average time from application submission to a final decision for initial funding 
is four months. Institutions already participating in the University Center program will be 
noticed by the appropriate EDA regional office of the application procedures for renewal 
funding. 



xxn 



RESEARCH ANfD EVALUATION PROGRAM 

PROGRAM GOALS 

Grants and cooperative agreements awarded under the Research and Evaluation program 
are used to support studies that will increase knowledge about the causes of economic 
distress and approaches to alleviating such problems. 

PROJECT TYPES/ELIGreLE APPLICANTS 

Studies funded examine issues related to (1) the causes of unemployment, underemployment, 
underdevelopment, and chronic depression in various areas and regions of the Nation; 
(2) the formulation and implementation of national, state, and local programs that will raise 
employment and income levels and otherwise produce solutions to problems resulting from 
the above conditions; and (3) evaluations of the effectiveness of programs, projects, and 
techniques used. Eligible applicants are private individuals, partnerships, corporations, 
associations, colleges and universities, and other suitable organizations. 

SELECTION CRJTERL\ 

EDA uses the following criteria to evaluate research and evaluation proposals: 

o potential usefulness of the research to state and local economic development 

practitioners; 
o soundness and completeness of the research methodology; 

o total cost and value of product in relation to cost; and 
o ability to be completed in 12 to 15 months. 

FUNDING LEVELS 

FY 90: $1,209,000 Average FY 91 grant: $99,000 

$1,382,000 Range of FY 91 grants: $12,000 - $350,000 



FY 91 
FY 92 



$500,000 



APPLICATION PROCESS 

Potential applicants should submit five copies of a concise proposal to EDA Headquarters. 
Proposals should include (1) the name and address of the applicants and the names, 
telephone numbers, and resumes of the project director and principal investigators; 
(2) the amount of EDA funds sought; (3) a brief scope-and-objectives section; (4) a brief 
but thorough description of the research methodology and data; (5) a work plan showing 
different phases of the project; (6) a detailed budget showing cost breakdowns; and 
(7) a corporate or institutional capability statement, when appropriate. Average processing 
time from receipt of a formal application to final decision is two months. Complete program 
information appears annually in the Federal Register . 



XXIII 



PUBLIC WORKS AND DEVELOPMENT FACILrTIES PROGRAM 

PROGRAM GOALS 

Grants are provided to help distressed communities attract new industry, encourage business 
expansion, diversify their economies, and generate long-term, private sector jobs. 

PROJECT TYPES/ELIGIBI£ APPLICANTS 

Among the types of projects funded are water and sewer facilities primarily serving industry 
and commerce; access roads to industrial sites or parks; port improvements; and business 
incubator buildings. Proposed projects must be located within an EDA-designated 
Redevelopment Area (RA) or Economic Development Center. Projects in other areas of 
an EDA-designated Economic Development District are also eligible if they will directly 
benefit an RA within the District. Projects must be consistent with an approved Overall 
Economic Development Program. An applicant may be a state, political subdivision of a 
state, Indian tribe, special-purpose unit of government, or public or private nonprofit 
organization or association representing an RA or part thereof. 

SFT FmO N CRITERL\ 

Priority consideration shall be given to projects that: 

o improve opportunities for the successful establishment or expansion of industrial or 

commercial plants or facilities; 
o assist in creating or retaining private sector jobs in the near-term, as well as 

additional long-term employment, provided that the jobs are not transferred from 

other areas and will result in a low cost per job in relation to EDA cost; 
o benefit the long-term unemployed and members of low-income families residing in 

the area served by the project; 
o fulfill a pressing need of the area and can be started and completed in a timely 

manner; and 
demonstrate adequate local funding support, with evidence that such support is firmly 

committed and available. 



FUNDING LEVELS 

FY 90 
FY 91 
FY 92: $154,160,000 



$109,830,000 Average FY 91 grant: $742,832 

$140,825,000 Range of FY 91 grants: $ 80,160 - $2,316,572 



APFUCATIGN PROCESS 

Eligible applicants should contact the Economic Development Representative (EDR) for 
the area. The EDA regional office can identify the EDR contact who will describe the 
program and provide guidance on preparing a preapplication. EDA screens proposals 
before deciding whether to invite formal applications. Average time from submission of an 
application to a final funding decision was five and one-half months in FY 91. Complete 
program information appears annually in the Federal Register . 



XXIV 



ECONOMIC ADJUSTMENT (TITLE K) PROGRAM 
(Long-Term Economic Deterioration (LTED/RLF) Component) 

PROGRAM GOALS 

Grants are provided to establish or expand revolving loan funds (RLF) in depressed areas. 
The program is designed to help areas overcome specific capital market gaps and to 
encourage greater private sector participation in economic development activities. 

PROJECT TYPES/EUGIBLE APPLICANTS 

In concert with private lenders, RLF grantees make fixed asset and/or working capital loans 
to area businesses. RLF projects support such activities as small business development, 
including start-ups and expansions; business and job retention; redevelopment of blighted 
land and vacant facilities for productive use; and support for growth industries and high-tech 
firms. 

Potential RLFs must be located in LTED eligible areas. To be eligible, an area must be 
experiencing at least one of three problems: very high unemployment, low per capita 
income, or chronic distress (i.e., failure to keep pace with national economic growth trends 
over the last five years). Eligibility status is available from EDA's regional offices. The 
applicant must be one of the following: a designated EDA Redevelopment Area (RA) or 
a nonprofit organization determined by EDA to be the representative of an RA; an 
Economic Development District; a state; a political subdivision of a state or a consortium 
of such units; or an Indian tribe. 

SET FfTTO N CRITERIA 

Key selection factors include the economic and financial needs of the project area; the 
anticipated benefits (such as filling specific gaps in the local capital market); and the 
applicant's ability to manage an RLF effectively. 

FUhfDING LEVELS 

FY 90: $12,031,000 Average FY 91 grant: $415,000 

FY 91: $12,035,000 Range of FY 91 RLF grants: $150,000 - $1,500,000 

FY 92: $11,500,000 



APPUCATIQN PROCESS 

Eligible applicants should contact the Economic Development Representative for the area 
or the appropriate EDA regional office for an LTED proposal outline. EDA screens 
proposals before deciding whether to invite a formal application. After inviting an 
application, EDA conducts one or more preapplication conferences to assist with its 
preparation. Average time from application submission to a final funding decision is four 
to six months. Complete program information appears annually in the Federal Register. 



XXV 



ECONOMIC ADJUSTMENT (TITLE DC) PROGRy^ 

(Sudden and Severe Economic Dislocation (SSED) Component) 

PROGRAM GOALS 

Grants are provided to help develop and implement local economic adjustment strategies 
designed to anticipate and prevent an economic dislocation or to reestablish employment 
opportunities and economic stability as soon as possible after a dislocation occurs. 

PROJECT TYPES/ELIGmLE APPLICANTS 

Strategy grants support the immediate development of a comprehensive response to an 
actual or threatened dislocation. Strategies describe the actions the community proposes to 
take to avert the dislocation or to generate reemployment opportunities for the dislocated 
workers. Implementation grants finance the implementation of one or more activities in an 
approved strategy. The types of activities financed include the construction of public 
facilities, business loans, and technical or management assistance. 

To be eligible, dislocations must have occurred within the preceding 12 months or be 
expected within two years and must meet certain job-loss thresholds. An applicant must be 
one of the following: a designated EDA Redevelopment Area (RA) or a nonprofit 
organization detennined by EDA to be the representative of an RA; an Economic 
Development District; a state; political subdivision of a state or a consortium of such units; 
or an Indian tribe. 

SELECTION CRITERIA 

Key selection factors include the severity of the dislocation and the responsiveness of the 
proposed project to the needs of the dislocated workers. 

FUNDING LEVELS 

FY 90: $12,326,000 Average FY 91 grant: S112,000 

FY 91: $12,282,000 Range of FY 91 grants: $22,000 - $1,250,000 

FY 92: $11,500,000 



APPUCATION PROCESS 

Eligible applicants should contact the Economic Development Representative for the area 
or the appropriate EDA regional office for an SSED proposal outline. EDA screens 
proposals before deciding whether to invite a formal application. After inviting an 
application, EDA conducts one or more preapplication conferences to assist with its 
preparation. Average time from application submission to a final funding decision is four 
to six months. Complete program information appears annually in the Federal Re gister . 



XXVI 



BUSINESS LOAN GUARANTEE PROGRAM 

PROGRAM GOALS 

Loan guarantees are used to provide financial assistance to firms that create or retain 
permanent jobs through the expansion, establishment, or retention of plants in distressed 
areas. 

TYPE OF ASSISTANCE 

EDA may guarantee up to 80 percent of the unpaid balance of business loans made by 
private lenders to private sector borrowers for the acquisition of fixed assets or for working 
capital. Investors must provide 15 to 25 percent of project funding, and lenders must be at 
risk for the non-guaranteed balance of the loan. 

ELIGIBILITY REOUIREMENTS 

To qualify, businesses must be located in an EDA-designated Redevelopment Area (RA) 
or Economic Development Center. Businesses located in other areas of an EDA-designated 
Economic Development District also are eligible if the project will benefit residents of a RA 
within the district. Assistance is limited to cases where financial aid is not available from 
other sources on terms and conditions that will permit accomplishment of the project's 
economic development objectives. Projects must be approved by the State and local 
jurisdictions in which they are to be located and must be consistent with an approved Overall 
Economic Development Program. Borrowers must meet statutory requirements and be 
creditworthy. 

FUNDING LEVELS 

FY 90: $150,000,000 Range of loans guaranteed: $500,000 - $10,000.000-H 

FY 91: $150,000,000 Interest rates: 1.25 to 2.5 percent above lender's prime rate 

FY 92: $5,000,000 Maturity: Working capital loans - 5 to 7 years; 

Fixed asset loans - average life of the asset(s) financed 

APPUCATION PROCESS 

Eligible borrowers should identify a willing lender. The lender (EDA's applicant for a 
guarantee) should contact the Economic Development Representative for the area and/or 
the Credit and Debt Management Division, Washington, DC. EDA conducts a review of 
the preliminary project proposal and, if the project warrants, authorizes the lender to submit 
an application for a loan guarantee. Average time from submission of an application to a 
final funding decision is four to six months, depending on the complexity of the project and 
the availability of credit data. Complete program information appears annually in the 
Federal Register . 



xxvn 



TRADE ADJUSTMENT ASSISTANCE PROGRAM 

Ppnr.RAM GOALS 

EDA funds a network of Trade Adjustment Assistance Centers (TAACs) through 
cooperative agreements. These TAACs aid firms and industries in applying for benefits 
under Chapter 3 of Title II of the Trade Act of 1974. 

PROJECT TYPES/EUGIBLE A PPLICANTS 

A firm affected by import competition may petition for certification of impact. Firms that 
believe they meet this criteria may contact TAAD or one of the 12 TAACs. If the firm 
appears to meet Trade Act certification criteria, the appropriate TAAC will offer to help 
the firm in completing and submitting a petition to TAAD. If the firm is certified, it may 
apply for technical assisunce in diagnosing its problems and assessing its opportunities. If 
the firm appears to have a reasonable chance of recovery, it develops an adjustment 
proposal which outlines the firm's recovery strategy and any need for implementation of 
technical assistance. If the adjustment proposal is accepted by TAAD, the firm is authorized 
to apply for technical assistance to implement the recovery strategy. Organizations 
representing trade-injured industries may apply to receive industry-wide assistance. 

«^p ] pmON CRITERIA 

To be certified eligible, a firm must demonstrate that threatened increased imports of 
articles directly competitive with its products contributed significantly to declines in sales or 
production and to significant actual or threatened job loss. For an industry association or 
other organization to be eligible for industry assistance, evidence must be submitted 
demonstrating that the industry faces import competition and includes a substantial number 
of Trade Act certified firms or worker groujjs. 

FUNDING LEVELS 

FY 90: $6,373,000 Average FY 91 grant: $1,033,000 

FY 91: $12,935,000 Range of FY 91 grants: $460,000 - $1,485,000 

FY 92: $14,000,000 

APPUCATION PROCESS 

To apply, a firm must submit a petition for Certification of Eligibility (Form ED-840P). 
Within two years of certification, the firm may submit an acceptable adjustment proposal 
and an application for technical assistance. A letter requesting technical assistance may be 
submitted to the appropriate TAAC. Industry associations or other organization seeking 
industry assistance mt;st submit an application identified as Standard Form 424, if 
encouraged to do so following the meeting with a TAAD representative. 

To be approved, an adjustment proposal from a certified firm must demonstrate that the 
proposal (1) is reasonably calculated materially to contribute to the economic adjustment 
of the firm; (2) gives adequate consideration of the interests to the workers of the firm; and 
(3) demonstrates that the firm is using its resources for its economic adjustment. 



xxvm 



ECONOMIC DEVELOPMENT ADMINISTRATION OFHCES 

ECONOMIC DEVELOPMENT ADMINISTRATION 

U. S. Deparimcnt of Commerce 

Room 7810 

Washington, DC 20230 (202) 482-5113 

PHILADELPHU REGIONAL OFHCE 

Liberty Square Building - First Floor 

105 South Seventh Street 

Philadelphia, PA 19106 (215) 597-4603 

Serves Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New 
Jersey, New York, Pennsylvania. Puerto Rico, Rhode Island, Vermont, Virgmia, Virgin Islands, West Virginia 

ATlJVNTA REGIONAL OFFICE 

Suite 1820 

401 West Peachtree Street, NW 

Atlanta, GA 30308-3510 (404)730-3002 

Serves Alabama, Florida, Georgia, Kentucky, Mississippi, Nonh Carolina. South Carolina, Tennessee 

CHICAGO REGIONAL OFHCE 

Suite 855 

111 North Canal 

Chicago, IL 60606-7204 (312) 353-7706 

Serves Illinois. Indiana. Michigan, Minnesota, Ohio, Wisconsin 

AUSTIN REGIONAL OFFICE 

Suite 201, Grant Building 

611 East Sixth Street 

Austin. TX 78701 (512)482-5461 

Serves Arkansas, Louisiana, New Mexico, Oklahoma, Texas 

DF.WTR REGIONAL OFFICE 

Room 670 

1244 Speer Boulevard 

Denver, CO 80204 (303)844-4714 

Serves Colorado. Iowa. Kansas, Missouri, Montana. Nebraska, North Dakota, South Dakota, Utah, Wyoming 

SF-\TT1.E REGIONAL OFFICE 

Suite 1856, Jackson Federal Building 

915 Second Avenue 

Seattle, WA 98174 (206) 553-0596 

Serves Alaska. American Samoa, Arizona. California, the Commonwealth of the Northern Mariana Islands. 
Guam. Hawaii. Idaho, Nevada. Oregon, Washington, the Federated States of Micronesia, the Republic of the 
Marshall islands 



XXIX 



Octobw 15, 1993 



APPROPRIATIONS 

ECONOMIC DEVELOPMENT ADMINISTRATION 

(In milKont of delltrt) 



TITLE I 

Public Facility Grants 
TITLE II 

Loan GuarantMt 

TITLE III 

Planninf 

(Diitricts) 
(Indians) 
(Statts) 
(Urban) 

Technical Assistance 
(University Centers] 

Research and Evaluation 

TITLE IX 



FY 91 

H.R.5021 

P' iOi-^ii 



$140,925 



(150.000) 



23.102 
(15.543) 
( 2.835) 
( 1.890) 
( 2.834) 

6.613 
( 4.724) 

1.193 



FY 92 

H.R 2608 

PL 103-140 



$154,160 



( S.OOO) 



25.276 
(17.708) 
( 2.960) 
( 1.973) 
( 2.958) 

9.900 
( 7.724) 

.500 



FY 93 
H.R. 5679 

P.L. mm 



1147.435 



24.770 

07.353) 

(2.901) 

&i 

9.000 

(7J10) 



Economic Adjustment 
(Sudden l< Severe) 
(Revolvinf Loan Fund) 


24.317 
(12.282) 
(12,035) 


23.000 
(-) 
(-1 


22.075 


TOTAL PWEDA PROGRAMS 


$196,050 


$212,836 


$203,280 


TRADE ADJUSTMENT ASSISTANCE 
(Trade Adjustment Act of 1974, 
PL93-618) 

(Trade Adj.Asst.Ctrs.) 

(Industry Grants) 


12.950 

(12.400) 
(550) 


14.000 

(13.450) 
(.550) 


13.720 

(-) 
(-1 


SUBTOTAL 


$209,000 


$226,836 


$217,000 


Loan Guarantee 

Profram Costs * 
Adminis. Expenses * 


n.a. 
n.a. 


.800 
1.614 




Salaries It Expenses 


$ 27.018 # 


$ 27.632 


$27118 


TOTAL under Commerce approp. 


$236,018 


$256,882 


$244,118 



PL 102-368(Suppl) for Title IX Disaster Relief 

PL 102-396(DOD approp)for Tide IX Defense Conversion 

GRAND TOTAL $236,018 



$75.0 



$331,882 



$80.0 
$324,118 



* Spttific a p pnpn mt iom n^ni ky Cndit Rtform Act (pan c/vntnimtnu Is <W|*( Bmfarermnt Ael e/ BKtt PimSt for Mmmum 

may I* trmuftmi to EDA itlarm wti »jpr<un 

# To iK(a^ 49 pvnMMal pon'MW tfovulrtf « ficoiomk C^wlopmrat iErpmnlUiM* <8aiei> 0/ B^ 



XXX 




Monday 
January 11, 1993 




Part IV 

Department of 
Commerce 

Economic Development Administration 

Economic Development Assistance 
Programs; Appropriations, 1993; Notice of 
Funds Availability 



XXXI 



3800 



Federal Register / Vol. 58, No. 6 / Monday, January 11. 1993 / Notices 



DEPARTMENT OF COMMERCE 

Economic Development 
Admlnletratlon 

(Dockat No. miie-TSiej 

Economic Development Aeeletance 
Program* •• Deacrtbad In Public Law 
102-395, Department* of Commerce, 
Juatlce, State, tt>e Judiciary, and 
Related Agencle* Appropriation*, 
1993; Availability of Fund* 

AGENCY: Economic Development 
AdministraUon (EDA). Department of 
Commerce fDoC). 
ACTION: Notice. 

SUMMARY: The Economic Development 
Administration (EDA) announces its 
policies and application procedures for 
funds available in fiscal year 1993 to 
support projects designed to alleviate 
conditions of substantial and persistent 
imemployment and underemplo}'ment 
in economically distressed areas and 
regions of the Nation and to address 
economic dislocations resulting from 
sudde.T. severe job losses. The purpose 
of this announcement is to 
communicate to potential applicants for 
EDA funds the policies and procedures 
that will be used to administer the 
Agency's programs during fiscal year 
1993. 

I. General Policies 

According to existing statutory 
criteria, areas containing approximately 
90 percent of the U.S population are 
eligible for EDA assistance which, in 
fiscal year 1993. totals approximately 
$217 million Priority consideration for 
funding will be given only to those 
proposals having the greatest potential 
to benefit areas experiencing or 
threatened with substantial economic 
distress EDA is particularly interested 
in projects located in authorized and 
designated enterprise zones. Distress 
may exist in a variety of forms, 
including exceptionally high levels of 
unemplojtnent. extremely low income 
levels, large concentrations of low 
income families, low labor force 
partidpatioD rates, ilgnlficant decline in 
per capita employment, (ubstantial loss 
of population because of the lack of 
employment opportunities, unusually 
large numbers (or high rates) of business 
failures, brm foreclosures, sudden 
major lavofis or plant dofuies, *nd 
draslically reduced tax bases. 

Potential applicants are responsible 
for demonstnting to EDA. through the 
provision of itatistict and other 
appropriate information, the nature and 
level of the distress their efforts are 
intended to alleviate. In the absence of 



evidence of exceptionally high leveb of 
distress. EDA funding is unUtely. In 
considering proposals to benefit 
severely distressed areas. EDA will give 
special consideration to those that 
address the needs of rural communities, 
particularly aid directed toward the 
economic diversification of such areas. 

During FY 1993. EDA will place a 
special emphasis upon assisting projects 
that focus on exports, cntrepieneunhip. 
and technology initiatives including 
innovation, transfer, and 
commercialization to alleviate 
conditions of substantial and persistent 
unemployment and underemployment 
in economically distressed areas and 
regions, through the provision of grants 
for Public Works and Development 
Facilities. Technical Assistance. 
Economic Development Planning, and 
Economic Adjustment Assistance 

EDA recognizes that small 
communities experience impediments 
to economic development other than the 
traditional inadequacies of existing 
water, sewer and roadway systems; 
therefore, in fiscal year 1993. EDA will 
give consideration to projects that will 
assist an area to overcome a special 
development or lnfi«stnicture problem 
that is preventing employment growth 
and economic development from taking 
place. Such projects may involve, but 
are not limited to. activities designed to 
enhance the expansion of the service 
sector of the economy when that sector 
is deemed more grov^ oriented than 
the traditional industrial sector, or 
innovative projects designed for the 
development of publicly-owned 
telecommunications infrastructure 
when it can be demonstrated that such 
a project is needed to foster productivity 
or enhance economic growth within an 
EDA-designated area Such proposals 
must be appropriately scaled and 
provide substantial and direct benefit to 
the local economy or otherwise enhance 
the economic prosperity of the area. 
EDA will consider providing assistance 
to demonstration typt projects that are 
especially creative from an economic 
development standpoint and that 
leverage a substantial amount of 
nonfederal lesource*. 

EDA expects substantial state and 
local sunport for proposed projects. 
Proposals that do not provide evidence 
of strong state and local leadership and 
financing are less likely to receive EDA 
assistance. 

In the case of protects involving 
construction, EDA expects construction 
to be initiated and completed in a 
timely manner. Applicants are expected 
to anticipata predictable debyt sudi u 
those caused by normal weather 
oonditioDS, permit* and approvals, lafd 



complications, community disputes, 
land acquisition, etc.. and account for 
them in developing project schedules. 
Projects which are lixely to encounter 
significant delays vvill receive low 
funding priority. Projects that 
experience uiueasonable delays 
following EDA approval may be 
terminated and tne funds deobUgated. 
These policies are consistent with 
EDA's objective of supporting activities 
that can begin to benefit local 
economies as soon as possible, thereby 
meeting the pressing development 
needs identified by project applicants. 
EDA expects those responsible for 
developing and managing projects to 
maximize the impact of the public funds 
by preparing and implementing projects 
as tnoroughly and expeditiously as 
possible. 

EDA funding will not be used directly 
or indirectly to assist employers who 
transfer one or more jobs from one 
commuting area to another. EDA 
nonrelocation requirements (13 CFR 
309.3) apply to all grants involving 
construction, rehabilitation or repair 
under titles 1. IV. DC, and section 301(0 
of the Public Works and Economic 
Development Act of 1965 (Pub. L. 89- 
136. 42 U.S.C. 3121-3246b). as 
amended (including grants for 
Revolving Loan Funds, under title DC). 

No award of Federal funds shall be 
made to an applicant who has an 
outstanding delinquent Federal debt 
until either: 

1. The delinquent account is paid in 
full; 

2. A negotiated repayment schedule is 
established and at least one payment is 
received, or 

3. Other arrangements satisfactory to 
DoC are made. 

Applicants may be subject to a pre- 
award accounting system survey by the 
Department of Commerce's Office of 
Inspector General, and fund recipients 
may be subject to audits or other 
inspections by the same office. 

Applicants eligible for assistance 
because of membership in an economic 
development district must be active 
participants in the district's economic 
development planning process. EDA 
will evaluate applicatTon* for 
conformance with published statutory, 
regulatory, and poUcjr requirements. 
Applications ptopoaod te funding 
under these propams are subject to the 
raquirements of Executive Order 12372, 
-Inteigo v enunantal Raview of Federal 
Programs. 

iui invitation to submit an uplication 
doe* not assure EDA funding. Factor* 
that will be consideied In vraluating 
propoeals include if and to what extent 
the pro)ect meets the aalaction crUnia. 



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F*dir«I KagtiSar / Vol 58. No. fi / Monday. JmuMy 11. 1093 / NottoM 



3801 



to the D«p«rbD«nL SF-LLL mbniitiBd 
by any tiar ndpinit or aubnclptoiit 
tbould be nibmitted to A* Dvputmmt 
In locordaiios with tha tawtnic t io n i 
contaioed In tha award docmnanL 



Protpactive paitidpaat* (a* dafinad at part of EDA to covar pra-award coats 



Untucxxuful applicants will ba notified 
of the itatui of thair applications when 
the ippropriste program funds have 
been awarded. 

Prooeulng Urns for proposals will 
depend upon the completeness of the 
Inrarmation and supporting documents 
provided in the sppllcation at the time 
of submission . Proposals that reouire 
additional Information from appucants 
or other sources will be ratumed to 
correct defidanciea and the official 
application racaipt dates will be 
adiusted accordingly. 

EDA will not approve projects that 
involve actual or potantial conflict-of- 
interest situations. If □)A identifies or 
•uspects a possible conflict-of-interest 
situation, or an appearance of such, 
application processing and/or grant 
award may be suspended and the 
burden will be on the applicant/grantee 
to take appropriate steps to eliminate 
the perception of a conflict of interest 
before application processing of the 
grant is resumed. 

Radpiants must agree that no hinds 
made available by EDA aball be used, 
directly or indirectly, lor paying 
attorneys' or consultants' fees in 
connection with securing awards made 
by the Government, such as, for 
example, preparation of the application. 
However, attorneys' and consultants' 
fees incurred for meeting award 
requirements, such as conducting a title 
search or preparing plans and 
specifications, may be eligible project 
costs and may be paid out of hinds 
made available by EDA, if such costs are 
otherwise eligible. 

Public Law 101-510, enacted 
November 5, 1990, aection 1405, are subject 

amending subchapter IV of chapter 15, . process. Name checks are intended to 
title 31, United States Code, prescribes reveal if any key individuals assodated 
the rules for determining the availability with the applicant have been convicted 
of appropriations. Accordingly, grant of, or are presently facing, criminal 
funds obligated for a project will expire charges such as fraud, theft, pw^ury^or 



being made they do ao aolely at their 
own hak of not being nimbuiaed by the 
Govemmaot NotwitLatanding any 
vaibal assurance that might have been 
received, there is no obligation on the 



IS cm part 26, aaction lOS) are subject 
to 15 CFR part 26, "Nonprocunment 
Debarment and Suspanaioai" and the 
related aection of the certification form. 

Grantees (as defined at 15 CFR part 
26, aection 60S) an tubjact to 15 CFR 
part 26, subpart F. "Govammantwida 
XequiremenU far Drug-Free Workplace 
(Grants)" uid the related aection of the 
certification 16m. 

Paraons (as defined at 15 CFR part 28, 
section 105) are aubjed to the lobbying 
provisions of 31 U.S.C 1352, 
"Limitation on tise of appropriated 
funds to influence certidn Federal 
contracting and finandal transactions," 
and the lobbying aection of the 
certification form which applies to 
applications/bids for grants, cooperative 
agreements, and contracts br mora than 
S100,000, and loans and loan guarantaea 
for more than S1SO,000, or the aingle 
bmily r»«v<iiiinn mortgaga limit for 
affected propams, whichever is greater. 
Any applicant that has oaid or will pay 
for labbying using any ninds must 
submit an SF-4JX, "Diadoaure of 
Labbying Activities," as required imder 
15 CTR part 26, appendix B. 

Applicants should be aware that a 
false statement on the application is 
grounds for denial or termination of 
mnds and grounds for possible 
punishment by a fine or imprisonment 
aa orovided in 18 U.S.C 1001. 

e%K';:^a'ffi',a""°" ;:2t'a3ir,ie7~;:^"?."i-.:j 

esubledtoanamadjadciwiew (^Udn an EDA-<ieaignated 

redevelopment area 



liie following matnial daecribes 
other polides and procaduies aasodatad 
with eech of EDA's piograms. 

a Program: P^lic Wotka and 
Oevalapmait Fadlitiaa Aaaistance 
(Cataloa of FedanI DoDsstlc Assistance : 
IliooBGoaenic Devakipoent GctnU and 
lioans ibr Public Works and Development 
FacillUe*. 11 JOS Bcnnnmlr Development 
Public Woriu Impact Pragmm (PWIP)) 

Summary 

Funds available twder the Public 
Works and Development Fadlities 
Program are used to finance projects 
thst contribute to the economic 
development of distressed areas. Grants 
are aulLorixed by titles I and IV of the 
Public Works and Economic 
Development Ad of 1965. as amended 
(PWEDA), 42 U.S.C. 3131 and 42 U.S.C 
3171(a) (3). 
Eligibility 

Eligible applicants under this program 
indude any state, or poUtical 
•ubdi^on thereof, badian tribe, the 
Federeted States of Mioonesia, the 
Republic of the Marshall Islands, the 
Commonwealth of Puerto Rico, the 
Virgin Islands, Guam, American Samoa 
and the Commonwealth of the Northern 
Mariana Islands, or private or public 
nonprofit organixaUon or asaodation 
rapresentiiig anv redevelopment area or 



in five years from the fiscal year of tne 
grant award. 

Applicants must submit a completed 
Form CD-511, "Certifications Regarding 
Debarment. Suspension and Other 
Responsibility Matters: Drug-Free 
Workplace RaquiremenU and 
Lobbying." 

RedpienU shall require applicants/ 
bidders for tubgrants, oontracu, 



other matters which aigniflcantly refled 
on the applicant's management, honesty 
or finandal intMrity. 
Radpiants ana aubradp 



, [plants are 

aubjed to all Federal lawa and Federal 
and Departmental polidaa. regulations, 
and procedures applicable to Federal 
finandal osaiatanoe gmta&t. 

Unaattsbdory parfannanoe under 
prior Federal awards nay leauh in an 
eubcontrads, or other lower Uar covored appUcoUon not baing oonaidared for 
transactiona at any tier under the award funding, 
to submit, if applicable, a oompletod If an application la aalactad far 

Form CD-512, "CortlflcaUona Regarding frinding. EDA has no obligation to .^-.„„ tvi. 

Debarmant.Suapanaion,lnaligibiiity provide any additional future fundhig in «^PP" ^* '" ° ^.**g^^i™* 

J~f~. .-•■_./ Connection with an award. Ranewal of r""»VjTT!'°!i^?^.l!lf.K. 

an award to tooooaa funding or axland finandal atabiLty and continuity of Uia 
tha period of oorfaraianca U at tha total 
diacration of the EDA. 
Applicants diouM ba aw«M mot if 



Redevelopment areas, other than 
those designsted under the Public 
Works Imped Program, iqust have a 
current EDA-epproved Overall 
Economic Development Program 
(OEIH>). Political entities claiming 
eligibility imder OEDPt developed by 
miSticounty economic development 
organizatioiu are oxpeded to continue 
to portidpata actively in the 
organization. Further information on 
eligibility la available from EDA'a 
ngional ofBoaa. Nonprofit applicants 
are urged to aeek the cooperation and 
•upport of units of local govommant 
and, «Aan 4laainad oppre^riate by EDA. 
to have the local govammant aerve aa 



and Voluntary Exdusion-Lowar Tiet 
Covered Ttanaaetions and Labbying" 
and disdoeurs form, SF-4XL, 
"Disdoeure of Lobbying Activities." 
Form CD-S12 is intended for the use of 



redpienu and abould not be transmitted they incur any coats (nior loan owaid 



projed, in the oeent that the nooprofit 
ODtity Bnda itaalf in a position of not 
hovtaig Iba -fUmdal loaouioaa to 
piopariy and ofBdently admlnlator. 



XXXIII 



3802 



Federal Register / Vol. 56, No. 6 / Monday. January 11. 1993 / Notices ^^^ 



operate, and meintain the EDA-assisted 
facility consistent with the provisions of 
13 CFR 314-Property Management 
Standards. 
Program Objective 

The purpose of the Public Works 
Program is to assist communities with 
the funding of public works and 
development facilities that contribute to 
the creation or retention of private 
sector jobs and to the alleviation of 
unemplo>-ment and underemployment 
Such assistance is designed to help 
communities achieve lasting 
improvement by stabilizing and 
diversifying local economies, and 
improving local living conditions and 
the economic development of the area. 
EDA emphasizes the alleviation of 
unemployment and underemployment 
among residents of the project area as a 
primary focus of this program In view 
of the current rural distress, 
applications from rural communities 
will be reviewed with particular 
interest. 

Funding Avaihbilily 

Funds in the amount of $147,435 
million are available for this program. 

Funding Instrument 

EDA may provide direct grants not to 
exceed 50 percent of the estimated cost 
of the project. However, under certain 
circumstances supplementary grants to 
augment the direct grant may be 
provided up to a maximum of 80 
percent of tne eligible project costs But 
in no event shall the Federal 
panicipation exceed 80 percent of the 
aggregate cost of any such project, 
except in the case of a grant to an Indian 
Tribe, where EDA may waive the non- 
Federal share Applicants are required 
to provide the local share from 
acceptable sources including, but not 
limited to cash, local government 
general obligation or revenue bonds. 
Community Development Block Grant 
(CDBG) entitlement funds or balance of 
state awards. Farmers Home 
Administration loans, and other public 
and private financing, including 
donations. 

The local share need not be in band 
at the time of application, however, the 
applicant must satisfy EDA that the 
funds will be available to provide the 
nonfederal share of the project. 

The local share must not be 
encumbered in any way that would 
preclude its use consistent with the 
requirements of the grant. Priority will 
be given to applications which 
maximize the local share's percentage of 
the project cost. Supplementary grant 
assistance to finance over 50 pertwnt of 



the project costs will be approved by 
EDA only for proposals in areas of hi^ 
distress. Decisions on such 
supplementary grant assistance will be 
based on the nature of the project, the 
amount of fair user charges or other 
revenues the project may reasonably be 
expected to generate, and the relative 
needs of the area (see 13 CFR 305.5). 

Selection Criteria 

For both regular public works projects 
and Public Worits Impact Program 
(PWIP) projects, priority consideration 
will be given to those which are the 
most competitive based upon the project 
selection criteria set forth oelow, that 
best meet the needs of eligible areas, 
and that are located in areas of severe 
economic distress. 

A. Public Works Projects 

Factors that will be taken into account 
in considering projects eligible under 
section 101(a)ll)(AHC) of PWEDA, 42 
U.S.C 3131(a)(l)(A)-(C), include if and 
to what extent the project: 

1. Improves opportunities for the 
successful establishment or expansion 
of industrial or commercial facilities in 
the area where such project will be 
located 

2. Assists in creating or retaining 
private sector jobs in the near term and 
assists in the creation of additional long- 
term employment opportunities, 
provided the jobs are not transferred 
from any other area of the United States, 
and will result in a low cost-per-job in 
relation to total EDA cost. 

3. Benefits the long-term unemployed 
and members of low-income families 
who are residents of the area to be 
served by the project. 

4. Fulnlls a pressing need of the area, 
or part thereof, in which it will be 
located. 

5. Is consistent with the EDA 
approved Overall Economic 
Development Program (OEDP) for the 
area in which it is, or will be, located, 
and has broad community support. 

6. Is supported by significant private 
sector investment. 

7. Promotes exports, 
entrepreneurship, or technology 
initiatives including innovation, transfer 
and commercialization. 

8. Has evidence of adequate local 
share of funds 

9. Supports developments taking 
place in designated enterprise zones, 
particularly in rural areas. 

10. Demonstrates that necessary 
permits, land acquisitions, or options on 
land and rights-of-way have been 
obtained and that all other lagal 
requirements of the application process 
have been satisfied. . 



1 1 . Maximizes the amount of local, 
state or other Federal funding that is 
available. 

12. Gives evidence of the ability to 
begin and complete construction in a 
timely manner in accordance with a 
schedule to be agreed upon by EDA and 
the apphcant and included in the grant 
award. EDA discourages the start of 
construction prior to grant award and 
cautions that financial hardship may be 
experienced by applicants whose 
projects are not approved. EDA will 
require all applicants that request 
approval to proceed with construction 
prior to grant award to acknowledge that 
they are proneding at their own risk 
and without recourse to EDA if the grant 
is not awarded or EDA requirements are 
not met. EDA also requires that 
compliance with environmental 
regulations be completed before 
construction begins. EDA's regional 
office must have time to complete its 
"Finding of No Significant Impact," and 
clearances must be obtained from 
appropriate state and Federal agencies. 
Furthermore, EDA may view the start of 
construction prior to grant award as an 
indication that the grant funds are not 
essential for the successful 
implementation of the project. 

13. If located in an Economic 
Development Center (i.e.. Growth 
Center) that has a stable economy with 
little distress, must include an 
employment plan that explains how 
new employment opportunities for 
residents of nearby highly distressed 
redevelopment areas will be provided. 

B. Public Works Impact Pro-am 

Factors that will be considered in the 
evaluation of projects under the Public 
Works Impact Program (PWIP) 
authorized by section 101(a)(1)(D) of 
PWEDA, 42 U.S.C. 3131(a)(1)(D). 
include if and to what extent the 
project: 

1. Directly assists in creating 
immediate useful work (i.e., 
construction jobs) for the unemployed 
and underemployed residents in the 
project area; 

2. Improves the economic or 
commimity environment in areas of 
(evera economic distress; 

3. Includes a specific plan (i.e.. PWIP 
Employment Strategy) for hiring the 
unemployed and underemployed 
persons from the project area to wo^ on 
the construction of the project; EDA will 
evaluate all plans to eiuure that they 
contain a logical explanation of how the 
employinent objectives will be met; 

4. Assists in providing long-term 
employment opportunities or other 
economic benefits for the unemployed 
and Hsderemployed in the project area; 



xxxrv 



Federal Register / Vol. 58, No. 6 / Moiday, January 11, 1993 / Notices 



3803 



5. Priinahly benefits low-locome 
families by providing essential 
community services, or satisfying a 
pressing public need: 

6. In addition to the requirement for 
tegular public works projects, as 
contained in paragraph A, can begin 
construction quickly (normally within 
120 days after acceptance of the grant by 
the applicant); 

7. Has substantial labor intensity, 
where labor intensity is the proportion 
of labor costs to the total project costs: 
and 

8. Promotes exports, entrepreneurship 
or technology initiatives including 
innovation, transfer, and 
commercialization. 

C. Industrial Park Projects 

Applications proposing projects that 
will primarily serve an industrial park 
or site will be evaluated on such 
additional factors as: 

1. A detailed analysis of existing 
industrial park capacity and utilization, 
occupancy rates for existing developed 
industrial parks currently available 
within a 2S-mile radius of the project 
site For cities with populations over 
50,000, the prescribed area may be 
determined by an analysis of industrial 
sites within an established industrial 
area, which may be less than a 2S-mile 
radius. Contact the economic 
development representative (EDR) for 
the area or the appropriate EDA regional 
office for guidance. 

2. Commitments in writing from 
identified tenants to expand existing 
operations or to locale in the industrial 
park or site Commitments must include 
a description of the industry, the 
number of jobs created or saved, an 
implementation schedule, and the 
relationship of the commitment to the 
requested grant assistance 

3. The existence of a documented 
marketing strategy and demonstrated 
financial ability to market space in the 
industrial park or site. Strong emphasis 
will be placed upon this requirement. 

Construction Project Implementation 

As indicated in the first section of this 
Notice. EDA expects construction 
projects to be Initiated and completed in 
a timely manner and in accordance with 
the schedule agreed upon in the grant 
documentation. The t«dpient will be 
responsible for promptly notifying EDA 
of any events that prevent adherence to 
the approved schedule. The recipient 
must provide an explanation of why the 
•vents were beyond its ability to predict 
or control and obtain EDA 'a approval of 
changes In the achedule prior (o 
pit>ceeding with project 
implementation. B>A expects redpientt 



to anticipate predictable delays (such as 
those caused by land acquisition 
problems, local financing requirements, 
normal weather conditions in the area, 
acquisition of state permits and 
approvals, and known public objections 
to the project), and to take them into 
account iii preparing the project 
schedule. Recipients who foil to comply 
with project schedules are subject to 
grant suspension or lerminatioD. 

Under most circumstances, EDA will 
not provide additional funds to finance 
cost overruns that occur during project 
implementation. 

Proposal Submission Procedures 

To establish the merits of project 
proposals, interested parties should first 
contact the economic development 
representative for the area (see listing in 
section X). The economic development 
representative for the area will provide 
a preapplicalion form (ED-IOIP, OMB 
Control No. 0610-0011) and arrange for 
conferences to discuss the proposal. 
EDA will screen proposals before 
inviting the submission of an 
application. As previously mentioned, 
an invitation does not assure EDA 
funding Proposals will be evaluated 
based upon: 

1. Conformance with statutory and 
other legal requirements and with the 
selection criteria mentioned above; 

2 The merits of the proposal in 
addressing the economic development 
needs of the eligible area; and 

3. The availability of program funds. 

Processing time lor project proposals 
depends upon the completeness of 
information and supporting documents 
provided in the preapplicalion form at 
the time of submission. Project 
proposals that require additional 
information from applicants or other 
sources will be returned to correct 
deficiencies and the official application 
receipt dates will be adjusted 
accordingly. 

Application Procedures 

Following a review of project 
proposals, EDA will invite entities 
whose projects are selected for 
consideration to submit applications. 
Ilie application will include a form Q>- 
lOlA, as approved by the Office of 
Management and Budget Control No. 
0610-0011. The demand for public 
works assistance is expected to exceed 
available funding. Therefore, to avoid 
having incomplete piopoaaU delay 
other more timely ^ant awards, a 120- 
day time restriction will apply to 
invited applicationi lor reaolviog 
application defidendea. ApplicitioDa 
that cannot be r ecommendea for 
approval within 120 days of leoeipt in 



a regional office because of unresolved 
issues will be returned to the applicants. 
Such applications may be reconsidered 
at a future date, but roust compete with 
other proposals at that time. 

Previous Applications 

Project applications Invited, but not 
funded in FY 1992, remain eUgible for 
funding consideration. Applications 
received prior to the date of this Notice 
will be processed and evaluated in 
accordance with the project selection 
criteria published for FY 1992 and 
current legal requirements. Those 
applications received on or after the 
date of this Notice must be consistent 
with the project selection criteria and 
requirements published in this Notice. 
Applicants whose projects were invited 
but not submitted to EDA in FY 1992 
should contact the appropriate EDA 
regional office regarding forms to be 
used for FY 1993. 

Further Information 

For further information contact the 
appropriate EDA regional office or 
economic development representative 
for your area (see section X of this 
Notice). 

in. Program: Local Technical 
Assistance 

(Catalog of Federal Domestic Assistance: 
11.303 Economic Development — Technical 
Assistance) 

Summary 

Funds under the Local Technical 
Assistance Program are awarded to 
eligible applicants to help assure the 
successful initiation and 
implementation of area, state, and 
regional development efforts designed 
to alleviate economic distress. This 
program is authorized under section 
301(a) of the Public Works and 
Economic Development Act of 196S, as 
amended, 42 U.S.C. 3151(a). 

Eligibility 

Eligible applicants for Local 
Technical Assistance grants or 
cooperative agreements include public 
or private nonprofit national, state, area, 
district, or local organizations: public 
and private colleges and universities: 
Indian tribes, local governments, and 
•tate agendes. In certain drcumstances, 
application* may be considered from 
other applicants such as private 
individiuls, partnerships, firms, and 
corporations. 

Program Objectin 

The Local Technical Assistance 
Program i* deaignad to help alleviate or 
pravent ceaditiao* of exceaaive 



XXXV 



3804 



Federal Register / Vol BB. No. 6 / Monday, January ii, 1993 / NotioM 



uaemployment or uoderamploymeiit 
and problems of economically 
distressed populalions in rural and 
urban areas. 

Funding Availability- 
Funds in Ihe amount of S600,000 are 
available for the Local Technical 
Assistance Program. (Note: EDA 
generally will limit its funding for a 
proposed Local Technical Assistance 
project to i25,000.) 

Funding Inslrument 

EDA will provide grants and 
cooperative agreements not to exceed 75 
percent of the proposed project casts. 
Applicants are expected to provide the 
remaining share, preferably in cash. The 
Assistant Secretary may waive all or 
pan of the 25 percent snare oflechnical 
assistance grants, if he/she determines 
that the nonfederal chare is not 
reasonably available because of the 
critical nature of the situation requiring 
technical assistance or for other good 
cause. 

Project Duration 

Assistance will be for the period of 
time required to complete the scope of 
the work This typically does not exceed 
twelve months 

Selection Criteria 

Preference will be given to Local 
Technical Assistance proposals which: 

1. Show that the proposed project will 
lead to the near-term (between one and 
five yoarsj generation or retention of 
private sector jobs. 

2. Support the efforts of state and 
local organizations and institutions, 
including nonprofit development 
groups, to undertake and promote 
effective economic development 
programs targeted to people and areas in 
distress 

3. Stimul«:e significant private and 
nonfederal public investment for 
economic development purposes. 

4. Benefit severely distressed areas, 
particularly rural counties and 
communities. 

5. Demonstrate innovative approaches 
to stimulating economic deveJopmant in 
depressed areas. Q3A is particularly 
interested in receiving innovative 
proposals in the following areas: 

a. Export development as an 
economic development strategy, 

b Assistance to business in usee of 
technology initiatives including 
innovation, transfer, and 
commercialization; 

c. Minority business development in 
distressed areas, 

d. Tourism; 

e. Rural aotafpiiaa xooas; 



r Linkages in aoooomic development 
and envimomantal goals; and 
g. Eotiepfooeursbip. 

6. Are consistent with ihe OA 
approved Ovafell Economic 
Etevelopment Program (OEOPl for the 
area in which the projects are located 
and have been tacommended by (he 
OEDP Committee (if appropriate lo the 
nature of the pntjed). 

7. Present an •pproprlata and clear 
project design. 

8. Are proposed by Ofganizatioos tvith 
the capacity, qualifications and staff 
necessary to tmdertake the intended 
activities. 

g. Present a reasonable, itemixed 
budget fbr the proposed acdvitie*. 

Pre-AppUcation Procedures 

Parties seeking support ibr Local 
Technical Astistanoe projects should 
contact the economic development 
representative (EDR) for information 
before preparing e proposal. (See EDR 
listing in section X of this 
announcement) 

EDA vtill evaluate all propocals as 
they are received and invite 
applications for those which best satisfy 
the selection criteria. An invitation does 
not. however, assure EDA funding. 

Potential applicants should submit 
one original and two copies of a brief 
and concise proposal 

Proposal Submission Procedures 

Potential applicants must stibmit to 
the appropriate EDR proposals tlt^ 
itxJude: 

1. A cover p^ giving a shoft^ 
desoriptive project title, the name'ud 
address of the applicant organisfltf^n. 
the name and telephone number of the 
project director, the project duration, 
the amount of EDA hmds requested, and 
the program (Local Technical 
Assistance) that would provide the 
funds; 

2. A brief description of the project; 

3. A brief explanation of why the 
project is needed and its objectives; 

4. A watk plan showing tlifieraot 
phases of the project and tbeir timing: 

5. A detailed budget showing cost 
breakdowns, with QlA-funded and non- 
EDA-funded costs presented in aepante 
columns and with the H)A-funded cccts 
equaling to the total ahown on tba cow 
page 

Application Procedures 

The appropriate Q)A ngiooal office 
will invite aotities whoae prapoaals for 
Local Technical Assistance projects are 
selected far fiirtber oonaidatation to 
submit ^plicatioo narisgss The 
application will iodude a Standard 
Foiin-«24 (OMB Contfol No. 03S-0(M3). 



Further lafotmation 

For further information AouX Local 
Technical Assistance projects contact 
the appropriate EDR. (See H)R listing in 
section X of this annoimcement.) 

IV. Pnpui: Natioul Tacknical 



(Catalog of Fedenl Domeitic Asslsttsce: 
11.303 Economic Development— Technical 

Anlttasce) 

Summary 

Funds under the National Technical 
Aaaistanoe Program are awarded to 
eligible applicants who will offer 
assistance to local, regional and state 
organizations, and/or conduct 
demonstrations of and disseminate 
information about innovative 
development techniques designed to 
alleviate economic distress This 
program Is authorized under section 
301(a) of the Public Works and 
Economic Development Act of 1965. as 
amended. 42 U.S.C 3151(8]. 

Eligibihty 

Eligible applicants for National 
Technical Assistance grants or 
cooperative agreements include public 
or private nonprofit national, state, area, 
district, or local organizations; pubhc 
and private colleges and universities, 
Indian tribes, local governments, and 
state agencies In certain circumstances, 
applications may be considered from 
other eligible applicants such as private 
individuals, partnerships, firms, and 
rorporaUons. 

Pfoffum Objective 

The National Technical Assistance 
Pn>gram is designed to help alleviate or 
prevent conditions of excessive 
unemployment or underemployment 
and problems of economically 
distressed populations. 

Funding Availability 

Funds in the amount of S83O.O00 are 
available for the National Technical 
Assistance Program. 

Funding Instrument 

EDA will provide grants and 
oooperativ* agreements not to axoaed 75 
peroaol of proposad project coats. 
Applicants are expected to provide the 
rs tn a ln l n g ahare. In oases where Q)A 
issuas a Solicitation of Applioatioos, an 
applicant's ahare may not be required. 
The Aasialant Secretary may waive all 
or part ofthe 2S parcsnt nonfedaral 
share of iachnioal «««i««tnf pants. If 
he/she datanninaa that tha noaMaral 
ahare is not nasoaably available 
of the critical nature nfth^f 



XXXVI 



F»dwl R«gtoter / Vol. 58. No. 6 / MoniUy. Jmmiy ll. 1893 / Notice i 



S805 



(ituation raquiiing tachnical asiisUiice 
or for other good cause. 

Project Duration 

Assistance will be for the period of 
time reauired to complete the scope of 
the work. Generally, this will not exceed 
fifteen months. 

Selection Criteria 

Preference will be given to those 
Technical Assistance proposals which: 

1. Do not depend upon further EDA 
or other Federal funding assistance to 
achieve results. 

2. Support the capabiUty of state and 
local oiganizations and institutions, 
including nonprofit development 
groups, to undertake and promote 
effective economic development 
programs targeted to people and areas lo 
distress. 

3. Stimulate significant private and 
nonfederal public investment for 
economic development purposes. 

4. Benefit severely distressed areas. 

5. Demonstrate innovative approaches 
to stimulating economic development in 
depressed areas. EDA is particuliirly 
interested in receiving iimovative 
proposals in the following areas: 

a. Assistance to business in 
implementing technology initiatives 
Including innovations, transfer, and 
commercialization: 

b. Exports: 

c. Entrepreneurship: 

d. Tounsm; 

e. Rural enterprise zones: and 

f. Linkages in economic development 
and environmental goals. 

6. Present an appropriate end clear 
project design 

J. Are proposed by organizations with 
the capacity, qualifications, and staff 
necessary to undertake the intended 
activities. 

8. Present a reasonable, itemized 
budget for the proposed activities. 

Pie-Application Procedure 

Potential applicants should submit 
one original and two copies of a brief 
and concise proposal wnich should not 
exceed 20 pages. Viu and capability 
information may be appended. 

Proposals should Indude: 

1. A cover page giving a short 
descriptive pro)ect title, the name and 
address of the performing organization, 
the name and telephone number of the 
project director, the project duration, 
the amount otEDA funds requested, and 
the program (National Technical 
Afsistanca) that would provide the 
funds: 

2. A brief scope-and-objectives section 
indicating why the pio)ect is needed, 
giving its objectives, and providing a 
capsule description of the project: 



3. A mora detailed dMOlplion of the 
project and its methodology: 

4. A work plan sbovring diSareot 
phases of the pittject and their timing: 

5. A detailed bu^t ibowins cost 
breakdowns, with u)A-fundea and non- 
EDA-funded oocta praeanted in eepante 
columns and with the □JA-fundad cocts 
adding to the total shown on the cover 
page: 

6. Mfumte for the project director 
and principal staff; and 

7. A corporate or inctitutlooal 
capability tlatunent. wbtn appropriate. 

Propoaals should be cubmitted to the 
Director, Technical Aasiatanoe and 
Research Division, Economic 
Development Administration, room 
731S. VS. Department of Commarce. 
Washington. DC 20230. 

Application Procedures 

The Technical Assistance and 
Research Division wiU invite entities 
whose proposals for National Technical 
Assistance projects are selected for 
further consideration to submit 
application packages. Such invitation, 
however, does not assure EDA funding. 
The application will include a Standard 
Form-424 (OMB Control No> 036-0043). 

Eligibility for Specific Solicitations 

EDA may. during the course of the 
year, identify additional specific 
economic development technical 
assistance activities. Organizations and 
individuals interested in being invited 
to respond to Solicitations of 
Applications (SOAs) to conduct such 
work should submit information on 
their capabiUties and experience to the 
Director, Technical Assistance and 
Research Division. Economic 
Development Administration, room 
7315, U.S. Department of Commerce, 
Washington. DC 20230. 

Further Information 

For further information about 
National Technical Assistance projects 
contact the National Technical 
Assistance Coordinator, telephone (202) 
482-2127. 

V. Program: Uniearaily Csnter 
Technical Aasistanca Protsd* 

fCaUlog of Fsdaial DomeMic Assistance: 
11.303 EooDomic Development— Technical 
Assistance) 

Summary 

Funds (or basic univeisity canter 
projects are used as seed mooay to help 
selected colleges and imivarslties 
mobilize their own snd other resources 
lo assist in the aconomic davalopment 
of distressed areas. The affbits oi 
university cantan sbotild focus on 



helping public bodies. nooproCt 
ofganiiatioos and businsssei plan sod 
ImplaoMot activitiaa daslpiad to 
ganarata jobs and incama. In additioo, 
finds may be used for prajads which 
promote the goals of the University 
Canter Program in other ways that 
damoostnte innovative economic 
davalopment. Support for these types of 
projects is suthoiiaad under eection 
301(a) of the PubUc Works and 
Eoooomic Devalopmant Act of 1965. as 
amended. 42 U.S.C SlSl(a). 

Eligibility 

Eligible applicants for university 
canter grants and cooperative 
•graements are public and private 
colleges and univardties, associations 
r ep r esenting audi institutions, and other 
organizations with expertise in 
Univenity Center Program issues. 

Program Objective 

The objective of these projects is to 
enable colleges and tmiversities to 
contribute to overall economic 
development by using their resources to 
provide technical assistance that will 
alleviate or prevent conditions of 
excessive unemployment or 
underemployment and problems of 
distresseo populstions In lndi\'idual 
ststes or suDstate areas. 

Funding Availability 

Fimds in the amount of S7.570 
million are available for univenity 
center projects. It is expected that 
continuation grants for existing centers 
will use all of this amount. 

Funding Instrument 

EDA will provide grants or 
cooperative agreements not to exceed 75 
percent of the proposed project costs. 

Project Duration 

Grants tviU be for a one-year period. 
Selection Criteria 

University center proposels (for both 
continuation and initial grants) must 
present a clear description of the 
economy of the proposed service area. 
its economic development needs, and 
the activities to be carried out with the 
requested funding. The «rork program 
for the unlvardty canter must be 
structured tmder the following 
categories: 

1. Providing technical assistance 
(which must be the major emphasis of 
the program). 

2. Ceoduding applied raeaarch. and 

3. Disseminating results of univsrsity 
canter activities. 

For this program. EDA defines 
tachnical assi^onca as any activity 



xxxvu 



3S0fi 



Fadanl Bugiittr / VoL 58. Na 6 / Monday, jHuury 11, 1M3 / NoUcm 



underuliAD io ntpoam to a <Uract 
requast for halp inUD a cUanl outside 
the sponsoriag uutltutioo, and applied 
reiaarch U deSned ai any activity 
undaitakao by the unlvanity cantar at 
its own initiative. 

Each piopoea) muat contain 
quantitative and qualitative araluatlon 
CTitaiia lor each activity Uttad under the 
above three work program categories. 
These criteria, t^ao aooaptad by EDA. 
will be uaad to iud^e tha paiiormance of 
the university oantar. 

Each uoivertity center that received 
funding in fiscal year 1992 wasnqulfad 
to provide these evaluatioo ailaria lor 
its woii program. EDA will give 
significant weight is aiaessing the 
overall parformanoe of a university 
center Io the degree that the unlvmsity 
center met these quantitative and 
qualitative evaluation ailaria. 

If one or more university centers tails 
to qualify for a fiscal year 1903 
continuation grant. □)A will hold an 
open compatiLioD tor those hinds in (ha 
appropriate regional ol&ce. Is judging 
proposals for initial grants under an . 
open competition, EDA will oanaider 
the: 

1. Quality of the proposed work 
program; 

2. Degree to which the work program 
is focused on providing technical 
assistance to organizations outside the 
sponsoring institution (ta., on prtaviding 
technical assistance), 

3. Presence of a methodology for 
recognizit^/rewarding the participation 
of faculty aiul students in the work 
prograni; 

4. Presence of a five-year financial 
plan for the university canter: 

5. Commitment, as evidenoad by 
financial support and other resources, of 
the university leadership at the bluest 
levels to the miaaion and purpose of the 
university center; 

6. Capacity of the inslitutioa and tha 
university canter to provide the 
proposed technical and other Ijrpea of 
assistance to lurladiclions and 
organizations widkio tha aarvlce araa; 

7. Degree Io which the propoaal 
complesMols and aupporta the local, 
laglonal or flata acenoBilc dovdopmant 
(tralaslas In tha aarvica araa: 

8. btaot to which tha oaolar propoaaa 
to target Ita asilitanre to the 
•conomically-diatraaaad aacUo^ of Its 
propoaad aendoa araa; and 

B. Pr aea nc a of other '«^*'"'''«' 
•aalataaoe p i u »li l a ]s In thaaropoaad 
aervloa aiaa Inrludlng Small and 
M uwri ty Businaas Devalop^anl Oanlacs 
(SBOCs and MBOCa) and Trade 
Ad|uftment Aaslstance Caolars. 

Institutiooa aiikinn rnnHniiatlon or 
initial puAa iisdar sua pi q yu ahouU 



raalisa that EDA wiil not award 
university center binda to provlda amall 
businaas (twinaeUng or maaagama nt 
assistance in areas aan^iced l^ an SBDC 
oranMBDC 

All applicants should i>alize that 
EDA UmlU the Indirect ooet nta that 
may be diaiged to grants imdar this 
program to 20 percent of total direct 
costs or the InsUtution'a negotiated 
indirect cost rata, whichever ia Ims. 
Institutions «rith tndiract coat lataa 
above 20 partaot may not iiae tha 
amount above the 30 paicani level a* 
part of tha aonfadeniAara. 

Pnpoaals far cttar pit^eda that aiadt 
the goals of the Unirasity Cantar 
Pro-am will be Judged en atmllar 
factors. Tliese Indude the polantla! 
impact of tite jm^ta tn dlatraaaad 
areas, the quality of the p i upoa e d waA 
program, and the quaHfioatMna of tha 
applicant to carry it ouL 

Depending on tha avalUbUtty of 
funds, EDA may hold a compaUtlos for 
abort-term (one to thtae years) incentive 
grants. This compatMon wUI be open to 
all currently and previously fonded 
centers, excapt those wrhoae hindli^ 
waa diacootiniied bacanae of poor 
penDimanca. 

Funding Policy 

Public Uw 102-395, tha Department 
of Commerce fiscal y«ar 1993 
Appropriations Ad, provides $7,S70 
million far this piogiam . a $154,000 
reduction from the fiacal year 1992 
amount. The accompanying Confcrence 
Report directs EDA to award these fcinds 
to uaiwfvlty canters that raoalvad 
funding in Bacal year 1992 and to make 
any adjustments m individual funding 
levels equitably among ril of the 
imiversity canters. 

A auocsasfal eppUoent under eny 
such opao competitlaa will be eligible 
for funding under &e pnipam far a Iva 
year period. aub)acl to tha oontlniwiid 
availability of program fiinds and an 
annual detsnmnatioo by EDA of 
aadsfactOTy paifcnnanoe by tte 
UBlvetsity oaotar. Any laatitiilion 
lacelvlngaB tailtiai unlvanity u ai itai 
rant in fiacal year 1993 will be laqolrad 
to provide a awfadawl dti aqiial to 
25 percaot af Iha Mai pra)acl oaau far 
tha flnt year. If funding la available, far 
the aaooDd Ibiuihbi na nab yaais. Iba 
InaHtutSoD riwula Inaaaaa Its 
Boniadaral sbat* to aqual tha ml varsity 
oaotar grant 



aligihla far i^»»««i«<n»ti««ii fcmiiii^ will faa 
notified of the amount of tha isqulrad 
nonfederal ahan and provided vrith 
additional program guidanoa. 

Pnpouoi Svnmlsafan PI uuetfures jot 
Botic Ghuiits 

Inatitutloiu aaeking funding far a 
imiversity cantar ahmild aubmit a 
propoaal daaorlbing tha aoHvitiea to be 
carried out arith tha pant fanda to the 
appnipdals EDA tagional office or to the 
Q)K far Ika van. (Saa H)A laglooal 
oSea and EDR Uat in Sactioo X of this 
announcement) 
f>ir1har ii^bnasation 

For ftmhar Infamatiaa about 
Univataity Oattar Tachoioal Aaaiataoca 
pro)ecta eaotact tha appni|Miata EDR or 
lagtooal oBfaw (Usting in Section X of 
this announcement) or the Univeraiiy 
Cenlar Coordinator, Technical 
Aasistanca and Itaaaarch Division, 
Economic Oavalopaant Administration, 
room 7315. ILS. Dapartmaol of 

Washington. DC 20230: 
(202) 482-2127. 



VL Pra^aaa: Plaaniag Aaaiataoce far 
Economic Devaliymaal Diatricta. 
Indian Tribaa. ami ladavalopaMBl 
Araaa 



lariManll 

11.302 Economic Develnpaiisit Ifcuipurt for 
PianalBg Oiganiations] 

Summary 

Funds aadar the District, Indian, and 
Araa Planning Program an awarded to 
defray administrative oxpenaes in 
auppoft of the e c onomic development 
planning eRbtts of economic 
dovalopmsDl diatricta (Districts). 
l a d asa juui aant areas (Areas) and Indian 
tribes. This mognm ia authorized tmder 
aadioo 301(b) of the Public Works and 
Economic Dava l o p mant Act of 1965, as 
amended, 42 U.S.C 31Sl(b). 

BU^btlity 

Eltfhla ^rpUcants an ■«™"»'nlr 
davala)maat diatricta, radevalopmont 
ataai wianltatlnni ia|iiaaaiillii| 
fadavatt^naot aiaaa (or paita of auch 
Araaa), Indian Mfaoa. oqanlntlotts 
laiiiaaanllija mulUpla Indian tilbaa, Iha 
Padatalad Sataa of kfiaoMBia, tha 
lapiMic of Iha MHdiall lalaadtt. tha 
Canaaawaalth of Puerto Xico, the 
Virria Uaada. Guam. ABaricaa Samoa, 
wd Iha Coaaoaaraalth of Iha Northan 
Mariana Mmii^ 



Each asisllag unhiwalty 
Dotlllad by the appraprlala iHloaal 
office of iU allgibUl^ far cooUnuatloa 
fending. AI that Una, MDlsanlty cHian 



winba- n* primary abjective afplannlag 
oiaiaaea far adaytdattaUva nxpanaaa 
901(b} b to aappeit ^ 



xxxvra 



F^dmni KagMw / Vol. 58, Na 6 / Moaday. Jmuaiy 11, 1003 / NotioM 



n07 



economjc darelopmant pragiamt 
designed to out* or leUin full-time 
pennuiaiit (obs and inoooM, particularly 
for tba unemployed and underemployed 
in the mod distrexed araa* served by 
the applicant Planning activities 
supported by these program funds must 
be part of a process involving significant 
leadership by public officials and 
private citiiens. 

Funding Availabilily 

Funds in the amount of S20.2S4 
million are available in two categories: 
Districts/Areas (Category A)— S17.3S3 
million: and Indian tribes (Category B>- 
S2.901 million. 

Funding Instrument 

Grant assistance can be provided for 
up to 7S percent of project costs for 
Category A grants with the applicant 
required lo provide the remaining share 
from local (non-federal) sources. 
Category B grant assistance may be 
provided for up to 100 percent of project 
costs. 

Project Duration 

Assistance %irill normally be for a 
period of twelve months. 

Selection Criteria 

EDA will consider the following 
factors, among other things, in 
evaluating proposals: 

1. The responsiveness of the proposed 
work program to the program 

Tlations contained in 13 CFR 307.22; 
The economic distress of the area 
served by the applicant; 

3. Provision ol an institutional 
capability statement, defining 
management and atafi capacity and 
qualifications in economic program/ 
policy development and operations: 

4. Past performance of any currently 
funded grantee (including information 
in scheduled progress reports): 

5. The local leaders' involvement in 
the applicants' economic development 
activities: 

6. The amount of local participation 
provided as matching dollars to the 
Federal funds: and 

7. Priority consideration will be given 
to currently hinded grantees. 

Proposal Submission Procedures 
Application proced u re s nay be 
obtained from EDA 'a regional offices for 
the following: 

a. Currently funded planning 
grantees: 

b. Proposals from applicants not 
currently funded under Categories A or 
B, that would fit into either of those 
categories; and 

c Special economic davalopmant 
activities that benefit one or mora 30l(b] 



grantees and cannot be finanod with 
other resources. 

Eligible appUcants under both 
Cate^iriaa A and B ahouU submit 
proposals «diich include: 

1 . A latter aigDad by the chief elacted 
offidel (Caialrman oflba Board, TUbal 
Chairman) ar anothar autboiiaad official 
of the applicant stating the 
organixatiaa'a daaiie lo Moai«« funds lo 
carry out lb* typaa of plnmiag and 
adminlstfative tOMUm aliglbU undar 
the 301(b) ptsipam. 

2. SignUteatt. ewifiaUa intamatioD 
en the laval of ocoaaaiic dittran in the 
area, i ncl u d i n g UDamplayBent and 
inoom* data. Any oujor changes in 
distress laveb during Ibe past jraar 
should ba described. 

3. A MPOffc program outlining the 
apedfic daivekpmaiit activiiiea that will 
be carried out under Iba grant and 
ei^laining how they lalate to the 
problems Identified in the area OEDP, 
annual report or oth«r documents. 

New anplicants should cubmit on* 
copy of uia propoaal to tba appropriate 
economic deveuipment rapiaaentativa, 
and an original 4nd on* copy lo tiia 
appropriate EDA regional office. 
AodrMses of the EDA regional offices 
and listing of the economic 
development lenre a a n t a tiees are found 
in section X of this NoUca. 

Formal ^plication Procedures 

EDA ragional efficae will contact 
currently fiwded granteee to inform 
them of the procedures for submitting 
applications for continuation Amding. 

Following review of the proposals 
suhmitlad, QM will invite those 
selected for fundii^ consideration to 
submit formal appiicaUans. Fkinding 
levels will be detannined bv the 
economic distrau and oaad of the area 
served by the epplicants, past 
perfomumce of previously Amdsd 
grantees, and amUlability of program 
nuds. The appUcation will include an 
SF-424. as approved by the Office of 
Management and Budget Control No. 
0348-0043. 

Further Information 

Fat further infomalioa contact the 
appropriata acosiomic development 
rspresentativ. EDA ngiooal office (sea 
eecUon X of this Noiioe), or Ifae Director, 
Pluming Division, Economic 
Oevelopnant AdwiniatratioB. foom 
7321, VS. Dnaitniasit of Caametoe. 
Washii^ton, DC 20230; laiapbana (202) 
462-3027. 

Vu. Progrant PuBniBg Aaaifllanoe fcr 
Statee and Ihban JInas 

(Cstalog ofFedsral DumsiUl AssJitaiirs: 
11.105 EnMomir Develo^eat— Stale and 



Urban ATM Bmnwiilr Dsislep mn t 
Planaing) 

Summoiy 

Funds uadariha Slata and tMan 
Planning Program are awarded to Mny 
ad minis t r ative expenses In support of 



of eligible appUcanla. This pfocrem is 
authoiiMd tudar aaction S02(a) of the 
Pisblic Woika aod Boaaemic 
DsvelopnMt Act olioes, at amended. 
42U.S.CSlSla. 
BUgibSUty 

Eligible appUcanta oadar this proeam 
ate the gov aroors of states, the chief 
•xecuUva effioet* of dtiea and counties, 
and Bubalaia plamiiag and devalopoant 
etganlMtiona (induding redevelopment 
araes and a uii i wic development 
districts). 

Program Objective 

• The primary objective of planning 
assistance under section 302(e) is to 
support significant economic 
development planning and 
implanaBtatiaa initiativas of eligible 
qiplicants. particularly those 
experiencing aevan economic distress. 

Assistance must be pert of e 
continuous process involving significant 
local laaderahip from pubhc officials 
and private dtiaens and should include 
efforts to reduce unemployment and 
inoeese incomes. These eHorts should 
be systematic end coordineted, when 
eppUcable, with plenning orgenizations, 
and should strengthen the plenning 
cnabilities of applicants. 

Planning pto^am funds will not be 
used to provide support to activities that 
can be mnded under the EDA Technical 
Assistance programs. 

Activities eligible for support indude 
economic analysis, definition of 
development goals, determination of 
project opportunities, development of 
aconomic davalopm«it polides, 
processes and procedures, end 
formulation and implementation of a 
development program. 

EDA is iBlavastad in proposals for 
plaiming activities desimed to address 
problems of eooaoaiicaily distressed 
aegmonts of Ifaa popolation. Funding 
priority will ba given to proposals 
promoting aa^oits. antrepranaurship, 
and lachnology initiativM including 
tamovatiaB, tmaaiar and 
c uu i n iw i a llMti an. or that reduce 
barriers lo Iba davalopmant of new 
buaiaaaaas. In the case of propoaals fr«ia 
etates, EOA la paitioularly iniaraatad in 
innowaiive approaches to Blaaning and 
implemanti^ aoooomic asvelopmant 
initiativas, as wall aa afforu that land 
themaelves to toplicetlon in other areas. 



XXXIX 



3808 



Federal Regirter / Vol. 58. No. 6 / Monday. January 11. 1993 / NoUws 



Funding Availability 

Funds in the amount orS4.516 
million are available for providing grant 
assistance under this program. 

Funding Instruwenl 

Grant assistance may be provided for 
up to 75 percent of project costs. 
Applicants will be required to provide 
the remaining share, preferably in cash. 
Applications for grants exceeding 
$200,000 will be given low funding 
priority. EDA will consider proposals 
for smaller grants to support the 
afoiemeotioned appropriate activities. 

Project Duration 

Assistance will b« for the period of 
time required to complete the work. 
This period is normally 12 to 18 
months. If Congress makes funds 
available for this program in subsequent 
years, grantees may submit applications 
for appropriate projects for up to a total 
of three awards 

Selection Criteria 

The content of the proposal and the 
economic distress of the area will be the 
. principal factors considered in 
evaluating proposals from eligible 
entities In assessing the distress foctor, 
priority consideration will be given to 
proposals from states and urban areas 
experiencing substantial economic 
distress. In the case of urban areas, high 
priority will be given to those with 
unemployment rates two or more 
percentage points higher than the U.S. 
average and per capita income levels 80 
percent or less of the U.S. average For 
(tates, high priority will be given to 
those that meet both of the above 
criteria, as well as those that meet one 
of the above oriteria and have distress 
equal to or greater than the national 
level for the other criterion. The most 
recent per capita income and 24-month 
average unemployment data available 
will be used to measure economic 
distress. 

Proposals from ttatas or urban areas 
which do not exhibit tignificant distress 
on the basis of unemployment or 
income data wiU not be contidered 
unless other acceptable evidence of 
•ubttantial distreat it provided by the 
applicant (e^, large numbers of 
agricultural and buainets {ailuies, large 
numbera of low income bmilie*. 
drastically reduced tax bates, etc.). 

Propotalt from ttatet and urban aieai 
wdiich are both below the U.S. national 
unemployment rate and above the 
national per capita income are unlikely 
lo be funded. 

Propotalt will be (udged on the batit 
of: 



1. Appropriateness of the work 
program to the tection 302(a) program 
objectives: 

2. The economic dittrest of the area 
terved by the applicant: 

3. Extent to which the proposed 
planning activities are expected to 
impact upon the service area's economic 
development needs, and the extent to 
which the proposal addrettet the 
problems of the unemployed and 
underemployed of the area, including 
the farm mmiUes. minorities, workers 
displaced by plant clotings, etc.; 

4. Past peirformance of currently or 
formerly funded grantees, if appUcable: 

5. The amount of local partiapation 
provided as matching dollars to the 
Federal funds: 

6. The proximity of the performing 
office to tne chief executive (i.e.. 
likelihood that the activities will have a 
tignificant influence on the policy and 
decision making process), and 

7. Other characteristics, tuch as 
involvement of the private sector in the 
proposed activities, and particularly for 
states, the Innovativeness of the 
proposed approach and replicability of 
the process or results. 

Proposal Submission Proceduns 

Potential applicants should submit 
proposals that include: 

1. A letter, signed by the chief 
executive of the applicant organization, 
indicating a desire to receive funds to 
carry out the planning activities 
outlined in the proposal: where the 
funded planning program will be placed 
in the organization, including the name 
and title of the person to be responsible 
for program implementation: the 
amount and for what period funding is 
being requested: and the anticipated 
funding arrangement if the planning 
activity it to continue beyond the period 
ofEDA tuppoTL 

2. Sisnincant. verifiable information 
on the level of economic dlttrett in the 
area, including imemploymen't and 
income data. Any ma|or changet in 
dittiets levelt during the past year 
should be detoibed. 

3. Information indicating the 
applicant't conimitmaot to the propoted 
MtoA prapam at demonstrated oy 
amount of local funding and the degree 
of interest displayed by tha chief 
executive. 

4. A time diait showing all ma)or 
work prt>graffl elements, protected 
element start and oomplatian dates, and 
the related financial aiqMndituies 
programmed lor aadi wnk alamant. 

5. A wroik pragram of no mere than 
10 pages wfaidi outlines the qMdfic 
planning acdvitias that «rlU be carried 
out under the grant and tpermas «diicb 



activities will be handled by in-house 
staff, consultants, etc The work 
program should also explain the need 
for the propoted activities, expeaed 
impactt and their timina. target 
population(t). and involvement of the 
private sector in the proposed activities. 

Current grantees seeking additional 
funding under thit announcement 
should comply with the instructions of 
this notice and include a 3-5 page 
progress report for the current grant. 

Ctoie copy of the propotal thould be 
tent to the appropriate economic 
development representative, and an 
original and one copy to the appropriate 
EDA regional office. The EDA regional 
office or the name, address and 
telephone number of the economic 
development repreientative for the 
eppUcant't area can be found in section 
DC of this Notice. 

Format Application Procedures 

EDA will evaluate proposals using the 
selection oriteria cited above. Once the 
merits of the proposal are estabUshed. 
EDA will initiate discussions vdth the 
prospective applicant to clarify and 
improve elements of the proposal, if 
necestary, and will invite those whose 
proposals an selected for funding 
contidention to tubmlt formal 
applicationt. which will include an SF- 
424 (OMB Control No. 0348-0043) and 
other application materials. It thould be 
noted that an invitation to submit a 
propotal does not atsure EDA funding. 
Proposals and applications will be 
processed at they are received. 
Applications received after FY 1993 
funds are exhausted may be retained by 
EDA for consideration for funding the 
following fiscal year, assuming fluids 
are available. 

Further Irtformotion 

For further Information contact the 
appropriate economic development 
npresentttive, EDA regimial office (tee 
section X of this Notice), or the Director, 
Planning Division, Economic 
Development Administration, room 
7321 . VS. Department of Commerce, 
Washington. DC 20230; telephone (202) 
482-3027. 

Vm. Program; Ffwiemic Ad)nttmant 
Aaaistance (Title DO 

{Catalog of Pedatal Ikanattic Attistanc* No: 
11.307 Sptdal Bmnwnlr Dtvalopaiant and 
Adjiittment Aitiattaoa P wyim — Lopg-Tem 
Bcenemic DeHrkvatlaa (LtSD) and Sud<kn 
and Serwe Bceoflml c D i t l oea t io a (SSED)) 

Sununoiy 

Funds under the Ecooomic 
Adjustment ftogiam an used to assist 
areas •xperiaadag Isng-tarm acoBoittic 



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r<d«wl lUgfater / Vol. 86. No. 6 / Mon(ky. Jmmry 11. t9B3 / Nottow 



deteriorttion (LTED) end naas 
thraataned or impacted by tud dani nd 
Mwa •oonomic ditlocMiaB (SSED). 
This pragram it authoritad under Ude 
IX of the Public Workf and Economic 
Development Act of 1865, at amended. 
42 U.S.C. 3241-324S. 

Program Objective 

The LTQ) Program aniati eligible 
applicants to develop or implement 
(tiategies denmed to halt and levane 
the Icog-term decline of their 
economies. The meet com mon t ype of 
activity funded under the LTO 
Program is Revolving Loan Funds 
(RLFs) , although other typet of eligible 
title DC activltie* may be funded. 

The SSQ} Program aacisu eligible 
appUcanti to lespond to actual or 
thnatened ma)ar (ob loaae* 
(dislocations) and other aavere 
economic adiustmant problems. It it 
designed to help communitiac prevent a 
fudden, major )ob ioat: to laaatablith 
employment opportunitiet and facilitate 
community ad}u(tment at quickly at 
possible after one oocurt; or to meet 
tpedal neodt iMulting bt>m aevere 
cnanget in aoooomic oonditiont. SSED 
assistance it intended to retpond to 
permanent rather than temporary )ob 
losses. Assistance may be in the form of 
a grant to develop a strategy to respond 
to the dislocation (Strategy Grant] or a 
grant to implement an EDA approved 
strategy (Implementation Grant). 

In light of the current high level of 
economic distress in rural areas, fOK it 
particularly interested in title DC 
projects designed to mitigate serious 
rural economic adjustment problems. 
EDA is also Interested in proposals to 
help severely distressed areas with large 
minority populations. 

Funding Availability 

Funds in the amouni of $22,075 
miUion are available for the Economic 
Adjustment Program in FY 1993. Of that 
amount, S11.03B milli on will be 
available for the SSQ) Progr am and 
SI 1.037 million will be available for the 
LTED Program. 

Funding Instrument 

Title DC funds are awarded through 
grants not to exceed 75 percent of the 
project cost. Acceptable aotuoet of the 
local share include, but are not limited 
to. local govemiBent gtnerel revenue 
funds; Community Deve l opment Block 
Grant (C3}BG) entitlement funds or 
balance of state awards; and e<her 
public and private donations. The 
Atiittant Secretary may waive all or 
part of the 25 percant naofederal share 
of economic adjustment assistance 
grants, if ha/ahe delenniBet that the 



nonMeral ahare is not feasonably 
available because of &e critical nature 
of the situatian lequiiiag aoaDomic 
adjustment assistanr» er for other good 
cause. The full amount of the locafshare 
need not be in hand at the time of 
application; however, the applicant 
must have a firm commitment liuui 
identified saurce(t), and the funds must 
be readily available. Hie local share 
must not be encumbered in any way 
that would preclude its use as required 
by the grant agreement The local share 
for the RLF Progr am must be in ca sh. 
and while the local share ibr the SSED 
Program may be cash or in-kind, priority 
consideration will be given to proposals 
%<rith a cash local ihara. 

Eligible Applicants 

Eligible applicants within areas 
meeting the EDA eligibility criteria 
described below include a 
redevelopment area or economic 
development district established under 
title IV of this Act. 42 US.C 3161; an 
Indian tribe; a slate; a dty or other 
political subdivision of a state, or a 
consortium of such political 
subdivisions; a Commimity 
Development Corporation defined in the 
Commimity Economic Development 
Act, 42 U.S.C. 9802: a nonprofit 
organization determined by EDA to be 
the representative of a redevelopment 
area; tne Federated States of Micronesia, 
the Republic of the Marshall Islands, the 
Commonwealth of Puerto Rico, the 
Virgin Islands, Guam, Americen Samoa, 
ana the Commonwealth of the Northern 
Mariana Islands. 

Eligible Areas 
A. LTED 

In order to receive priority 
contideration for funding imdsr the 
LTn}/RLF Program, an area must be 
experiendng at least one of three 
economic problems: Very high 
unemployment; low per capita income; 
or chranic distress (i«., failure to keep 
pace with national economic growth 
trends over the last five yeers). Priority 
will be given to thoee areas with two or 
more of these indicators. Eligibility is 
determined statistioaUy. Further 
information is available from EDA's 
regional oScea or die economic 
development representative for your 
area (aee Section X of this Notice). 

B.SSED 

tn order to receive priority 
consideration far funding under die 
SSH) Program, an area nniil ehow 
actual or tnraataoed pemanMit fob 
losses that exceed the foUowing 
threshold txitaria. vnlast odiarwise 
- determined by die Assistant Secretary: 



1. For areas not in Metropolitan 
Statistical Areas: 

a. If the unemployment rate of the 
Labor Market Aree exceeds die national 
average, the dixlacation must amount to 
the lesser of two (2 A) percent of the 
employed population, or 500 direct Jobs. 

b. If the unemployment rate of the 
Labor Market Area is equal to or lets 
than the national average, the 
dislocstton must amount to the lesser of 
four (4.0) percent of the employed 
poptjation. or 1.000 direct )obt. 

2. For areas within Metropolitan 
Statistical Areas: 

a. If the unemployment rate of the 
Metropolitan SUtistical Area exceeds 
die p«V«»<.l average, the dislocation 
must amount to the lesaer of one-half 
(0.5) nercent of the employed 
populatiao. or 4.000 duact Jobs. 

b. If the imemployment rate of the 
Metropolitan Statistical Area is equal to 
or lest than the national average, the 
dislocation must amount to the lesser of 
one (1.0) percent of the employed 
population or 8,000 direct jobs. 

In addition, fifty (50) percent of the 
job loss thrMhold must result from the 
action of a single employer, or eighty 
(BO) percent ofthe Job loss threshold 
must occur in a single standard industry 
classification (i.e.. two digit SIC code). 

In the case of a Preddentially 
declared natural disaster, the area 
eligibility criteria are waived. In other 
siinilarly exceptional circumstances, the 
oiteria may be partially wraived at the 
discretion ofthe Assistant Secretary. 

Actual dislocations must have 
occurred within one year and 
threatened dislocations must be 
anticipated to occur within two years of 
the date H)A is contacted. 

Selection Criteria 

Proposals will be evaluated based on 
conformance with statutory and 
resulatory requirements, the economic 
enlistment needs ofthe area, the merits 
ofthe proposed project in addressing 
those needs and the potential 
applicant's ability to manage the grant 
enectively. 

A. LTED/RIF Selection Criteria 
Key ftct orsln EDA's selection of 

proposed LTED/RLF pnijects include: 
1. Economic and Fmandal Needs of 

the Project Area: 

a. Areas %*ith the bluest levels of 
economic distieM (hl^ unemployment, 
low per capita incMue. vacant plants, 
deterionting infrastructure, and 
dedining famm eoooomy. etc) will 
receive miority consideration. 

b. Need for RLF financing will be 
evaluated based on the looal capital 
naikst and the appUcant'a anaisrsis of tt. 



XLI 



3810 



Federal Register / Vol. 58. No. 6 / MonJay. Jinuary 11, 1993 / Notices 



and how clearly this analysis defines 
the financial problems to be addressed 
by the RLF project. 

c Applicant's need for grant funds to 
carry out the project will be based on an 
assessment ofits financial resources 

2. Objectives and Benefits of Proposed 
Projects: 

Priority will be given to projects that 

a Stimulate private sector 
emplo)Tnenl. The number and types of 
jobs to be created/retained will be key 
factors in prtiject selection along with 
the job/cost ratio established for the RLF 
portfolio as a whole 

b. Target assistance to meet program 
objectives and to support specific 
economic adjustment activities planned 
or underway in the area, particularly 
those identified in the OEDP, title IX 
strategy, or other plans developed to 
deal with specific economic adjustment 
problems affecting the area. This may 
include target areas, industries, types of 
employers or other criteria that 
maximize the impact of assistance on 
specific needs within the area 

c. Leverage higher ratios of private 
investment than the required minimum 
ratio of two private sector investment 
dollars to one RLF dollar 

Note: The local share or other funds 
provided by the RLF to finance loans cannot 
be counted as leveraged dollars. 

d Promote exports, entrepreneurship. 
and technology initiatives including 
innovation, transfer and 
commercialization. 

e. Direct new job opportunities to the 
long-term unemployed and 
underemployed. 

f Provide technical and management 
assistance for RLF borrowers, in 
addition to loan funds. 

g Use creative financing techniques 
to overcome specific gaps in the local 
capital market. 

D. Make loans on a timely basis. The 
implementation schedule for RLF 

firojects will normally reouire that RLF 
oans in the initial round be closed (and 
all EDA funds disbursed) within three 
years of grant approval with no less than 
SO percent disbursed within eighteen 
months and 80 percent within two 
years. 

i. Include a larger local share than the 
required 2S percent or secure 
commitments for future funding from 
other private or nonfederal public 
sources. 

j. Coordinate activities uith other 
economic development organizations, 
loan programs, employment training 
programs and private lenders in the 
area 

k. Are established to fill capital gaps 
as opposed to providing subsidized 
credit (i.e.. below market interest rates). 



3. Effective Management of the RLF: 

EDA will also evaluate proposed 
projects to determine that the RLF will 
t>e properly managed. Key factors 
include: 

a. A strong and effective Loan 
Administration Board with broad 
community representation, including 
appropriate public and private sector 
representation. 

D Staff capacity in program and 
policy development, finance, law, 
marketing, credit analysis, loan 
packaging, processing, and servicing. 

c Emaent procedures for loan 
selection, approval, and servicing which 
emphasize the economic development 
potential of loans as well as sound 
management and financing practices. 

d. A strategy for relending loan 
repayments which will ensure that the 
RLF revolves continuously and thus 
fulfills its purpose of cresting jobs and 
stimulating economic activity on an 
ongoing basis. 

e Adequate resources to cover 
administrative costs of the RLF. 

f The potential applicant's experience 
and capacity for administering 
economic and business loan programs. 
If the potential applicant has designated 
another organization to administer the 
project, EDA will evaluate the 
experience and capacity of that 
organization, rather than the potential 
applicant. 

Nongovernmental (excluding 
economic development districts) 
organizations seeking funds must be 
sponsored by the local or state 
government having jurisdiction over the 
project area, and the sponsor must be 
willing to assume responsibility for 
operating the RLF should the 
nongovernmental entity no longer be 
able to administer the project. 

B. SSED Evaluation Criteria 

Key factors in EDA's selection of 
proposed SSED projects include: 

1. The severity of^the dislocation as 
measured by, but not limited to, the 
following factors: 

a. The degree to which the number of 
dislocated workers exceeds the 
eligibihty threshold. 

b. The proportion of the total job loss 
represented by a single employer. 

c. The proportion of employment in a 
(ingle standard industry classification 
represented by the firm(s) closing 

d. The applicant's need for grant 
funds to carry out the project based on 
en assessment ofits financial resources. 

2. The objectives and benefits of 
proposed activities as measured by the 
extent to which: 

a. For Implementation Grants: 
(I) Job creation or letentioD and 
restoration of the commimity '« 



economic base in the near term are 
emphasized versus more long-term, 

general economic development. Projects 
kely to encounter delays, particularly 
in initiating or completing construction, 
will normally not be given favorable 
consideration. 

(2) The jobs to be created or retained 
are permanent, will directly benefit the 
dislocated workers or will directly 
facilitate community adjustment, and 
are new employment opportunities and 
not transferred from one area of the 
United States to another. 

(3) The response to the problem is 
timely. 

(4) EDA assistance will be 
complemented by. or will complement, 
appropriate state and local efforts; for 
example, training and job placement 
services, other Federal investments, and 
private sector support. 

(5) The adjustment strategy and 
implementation activities proposed 
demonstrate an appropriately creative 
approach to addressing the dislocation. 

(6) The cost per job created or 
retained is minimized 

(7) In the case of a Revolving Loan 
Fund, the recycled loan proceeds 
generate economic development 
benefits. 

(8) The local share exceeds the 
required 25 pertant. 

0. For Strategy Grants: 

(1) The applicant has demonstrated 
the capacity to manage the planning 
process and subsequent implementation 
activities. 

(2) The proposed scope of work is 
responsive to the problem. 

(3) The focus of the planning effort is 
on the generation of practical and 
implementable solutions 

(4) The local share exceeds the 
required 25 percent. 

Project Implementation 

As indicated in the first section of this 
Notice. EDA expects all grant-funded 
projects to be initiated and completed in 
a timely manner in accordance with the 
schedule agreed upon In the grant 
documentation. The recipient will be 
responsible for promptly notifying EDA 
of any events that prevent adherence to 
the approved schedule. The grantee 
must also provide en explanation of 
why the events were beyond its abihty 
to predict or control and obtain EDA 
approval of changes in the schedule 
prior to proceeding with project 
implementation. 

EDA expects grantees to anticipate 
predicuble delays (auch as those caused 
by land acquisition problems, local 
finapti"B reqtiiremeott, acquisition of 
state pemiits and approvals, normal 
vreathar conditioiu in iiea, and public 



XLII 



Federal Regirter / Vol. 58. No. 6 / Monday. January 11. 1993 / Notices 



3811 



ob)ectJons to the pro)ect), and tale them 
into account in preparing the project 
Schedule Grantees who fail to comply 
with project schedules may be subject to 
grant suspension or termination. 

Proposal SubmJssion Procedures 

Interested parties should contact the 
economic development representative 
for the area or the appropriate EDA 
regional office (see section X of this 
Notice) for a proposal package. Project 
proposals, submitted by eUgible entities, 
will be evaluated by EDA staff on the 
basis of: 

1. Conformance with the evaluation 
triteria mentioned above and statutory, 
regulatory and policy requirements. 

2. The availabihty of funds. 

Application Procedures 

Following a review of project 
proposals. EDA will invite those 
projects selected for funding 
consideration to submit applications. It 
should be noted that an invitation to 
apply does not assure funding The 
application will include an El>-540, as 
approved by the Office of Management 
and Budget Control No. 0610-0058. 

Further Information 

For further information, contact the 
appropriate economic development 
representative. EDA regional office (see 
section X of this Notice), or the Director, 
Economic Adjustment Division, 
Economic Development Administration, 
room 7327, U.S Department of 
Commerce, Washington, DC 20230: 
telephone (202) 482-2659. 

DC. Program: Trade Adjustment 
Assistance 

(Catalog of Federal Domestic Assistance 
11.313 Ecooomic DevelopmenI— Trade 
AdjusUneot AssistaDCe) 

Summary 

Funds under the Trade Adjustment 
Assistance Program are awarded to a 
network of Trade Adjustment 
Assistance Centers, located around the 
Nation, which provide technical 
assistance to certified firms adversely 



affected by increased imports. Funds are 
also awarded under thia program to 
organizations representing trade-injured 
Industries. This program li authorized 
under the Trade Act of 1974, title D, 
Public Law 93-618, as amended, 88 
Stat. 1978, 19 U.S.C. 2101-2487. 

Funding Availability 

Funds in the amount of S13.220 
million are available for trade 
adjustment assistance to firms. These 
funds will be provided to the 
nationwide network of twelve (12) 
Trade Adjustment Assistance Centers 
(TAACs) through cooperative 
agreements which will utilize all of the 
available funds for trade adjustment 
assistance. 

Therefore, no new centers will be 
funded in FY 1993. Funds in the 
amount of $500,000 are available for 
industry technical assistance. 

Program Objective 

The Trade Adjustment Assistance 
Program is designed to provide 
technical assistance to certified firms 
and industries hurt by the impact of 
increased imports. The TAACs help 
firms submit certification petitions to 
the Trade Adjustment Assistance 
Division (TAAD) of EDA, and if the firm 
is certified, provides tecbnir.il 
assistance. A firm should work closely 
with the appropriate TAAC in 
petitioning for certification. Certified 
firms should also work closely with the 
appropriate TAAC in diagnosing their 
problems and developing an adjustment 
proposal, and in applying for technical 
assistance. 

An industry association or other 
organization interested in receiving an 
Industry assistance cooperative 
agreement must meet with a TAAD 
representative to discuss the Industry's 
problems, opportunities, and assistance 
needs. 

Criteria for Selecting Industry 
Assistance Proposals 

Industry associations and other 
organizations seeking trade adjustment 
industry assistance must demonstrate 



that the industry la injured by foreign 
trade and that the activities to be funded 
will yield some ahort-lerm actions that 
the industry itself (and Individual firms) 
can and will take toward the restoration 
of the industry's international 
competitiveness. 

The emphasis is on practical results 
that can be implemented in the near 
term, and long-term research and 
development activities are given low 
priority. It is also expected that the 
industry will continue activities on its 
own without the need for continued 
Federal assistance. 

Application Procedures 

Industry associations or other 
organizations seeking industry 
assistance must submit an application 
identified as Standard Form 424 (OMB 
Control No. 0348-0043), if encouraged 
to do so as a result of the meeting with 
a TAAD representative. 

Acceptable industry assistance 
applications will be processed as funds 
are available: normally one to three 
months is required for final decision on 
application. 

Formula and Matching Requirements 

Generally, a minimum of 50 percent 
share is required for industry assistance 
cooperative agreements 

Length and Time Phasing of Assistance 

Industry assistance cooperative 
agreements are generally for a 12-month 
period, but may be longer for tasks 
requiring more time to complete. 

Further Information 

For further information, contact the 
Director, Trade Adjustment Assistance 
Division, Economic Development 
Administration, room 7023, U.S. 
Department of Commerce, Washington. 
DC 20230: telephone (202) 482-3373. 

X. EDA Regional Offices and Economic 
Development Representatives 

The EDA regional offices, states 
covered, and the economic development 
representatives (EDRs) are hsted below. 



ATLANTA REGIONAL OFnCE 
401 West Peachtree Street, NW.. suite 1S20. AtlanU, Georgia 3030ft-3S10. Taiepbooa: (404) 730-3002 

Bumette. F. Wtyna, Arooov Building, room 134. 474 South Court Street. Montgomtry. AL 36104. TslephODe: Alabama. 

(205) 223-7008. 
Dsy, WUliam ). Jr., Federal Building, room 423. tO Nottli Hughay Aveoua. Orlando. FL 32801. Telepboot: Florida. 

(407) 64ft-6S72. 
Smith. LoU B . 401 Watt Paadftrae Street. NW.. suit* 1S20. AUanU. CA 3030a-3S10. Talepboes: (404) 730- Georgia. 

3000. 
Hunter. Bobby D.. 771 Coiporata Diivs. suite 200. Ltxingtoo. KY 40S03-M77. TalapboDa: (606) X33-2SS6 Kentucky. 



XLin 

3812 F«der>l Ragliter / Vol. 5B. No. 6 / Monday. Jaanaiy 11. t>993 / Notices 



Aiotwonli. Bob. 221 Ped«nl Building. 100 Wml Capllil SiTWt, |Kk*oa. MS 3926>. TclmhoDe: (Ml) 86S- MiitlatlppL 

4342 

JoDM. D»\e L.. P.O. Box 2522. Ralalgh. NC 27801. Telephone: (91«) BS6-4S70 _.... Nocth Cuoltiu. 

DixoD. Petrici* M., Stnm Thumood Fedenl Building, 183S Anembly StfeM. rooo MO. Columbia, SC 29201, Soutb Coolina. 

Telephone; (803) 76S-S676. 

Ptrki, Mitchell S., 261 CumberUnd Bend Drive, Nashville, TN 37228, Telephone: (615) 73G-5tll Taimauae. 

AUmN REGIONAL OFHCZ 

Suits 201. Grant Building. 811 East Sixth Stnel. Auitln, Tans 78701-3748, Telephona: (512) 482-6461 

Speannan, Sam, room 250«. Fedsral Building. 700 West CapitoL Uttla Rock. AX 72201. Tslapfaona: (501) 324- Atkanaat. 

5637. 
Davidson, Pamela, 412 North Fourth Street, room 104, Baton Rouge. LA 70802-5523, Telephone: (504) 386- Louisiana. 

0227. 

Swearingeo, lames. P.O. Box 2662. Santa Fe, NM 87501, Telephone: (505) 888-6557 New Mexico. 

Waters, Alvio X. Jr., 5500 North Western, suite 148, Oklahoma Qty. OK 73118-4011. Telephone: (405) 231- Oklahoma. 

4197. 
Ramirez, Roy, suite 201. Grant Building, 811 Bast Sixth Street Austin. TX 78701-3748. Telephone: (512) 482- Texas (south) 

5118. 
Jacob, Lawrence, suite 201. Grant Building, 811 East Sixth Street, Austin, TX 78701-3748, Telephone: (512) Texas (north). 

482-5119. ^ 

CHICAGO REGIONAL OFFICE 

111 North Canal Street, suite 855, Chicago, IL 60606-7204, Telephone; (312) 353-7706 

Casals. Alfred L. 509 West Capitol, suite 204, Springfield, IL 62704, Telephone: (217) 492-4224 Illinois. 

Henderson, Richard L., Fedsral Building Courthouse, it»m 402, 46 East Ohio Street, Indianapolis, IN 46204, Indiana. 

Telephone (317) 226-6104. 
C^ollison, James L, 100 North Warren Avenue, rxwm 1018, Saginaw, Ml 48606-0867, Telephone: (517) 758- Michigan. 

4097. 
Arnold. John B DI, 104 Federal Building, 515 West First Street, Duluth, MN 85802, Telephone; (218) 720- Minnesota 

5326. 
Hickey. Robert P., Federal Building, loom M7. 200 North High StraM. Coltonbus. Ohio 43214. Talephooe: Ohio. 

(614)469-7314 
Price, Jack D.. 505 South Dewey Street, itxus 202, Eau Claire, WI 54701, Telephone: (715) 834-4079 Wisconsin. 

DENVER REGIONAL OFFICB 

1244 Speer Boulevard, room 670. Denver, Colorado 80204, Telephone: (303) 844-4714 

Zender. )ohn. 1244 Speer Boulevartl, room 632, Denver, CO 80204, Telephone: (303) 844-4902 Colorado, Kansas 

Ocil. Robert, Federal Building, room 593A, 210 Walnut Street, Des Moines, lA 50309, Telephone: (515) 284- lows 

4746 

Koch, Forrest E, Robert A. Young Building, room 8.308H. 1222 Spruce Street. St Louis. MO 63103. Tele- Missouri. 

phone: (314) 539-2321. 

Rogers, John C Federal Building, room 196. Drawer 10074, Helena. MT 59626, Telephone: (406) 449-5074 .... Montana 

Albertson, Warren A.. Federal Building, room 219. Pierre, SO 57501, Telephone: (60S) 224-8280 Nebraska, South Dakota. 

Grant. Cornelius P., P.O. Box 1911. Bismarck. ND 58501. Telephone: (701) 250-4321 North Dakota 

Ockey. Jack, Federal Building, room 2414, 125 South State Street. Salt Lake Qty, LTT 84138, Telephone: (801) Utah, Wyoming 

524-5119 ' o 

PHILADELPHIA REGIONAL OPFKZ 
Curtis Center, Independence Square West, (ulte 140 South, Philadelphia. PA 19106. Telephona: (215) 597-4603 

Hammarlund, CN Jr.. Federal OfBce Building, room 453. 450 Main Street. Hartford. CT 06103. Telephone: Connecticut Rhode Island 
(203) 240-3256. 

Flynn, Patricia A., 2568 Riva Road, 2nd Roor, Annapolis, MD 21401, Telephone: (410) S62-2513 Delaware, Maryland, Dis- 
trict of Colmnbla. 

BliU. Sandlbfd. Federal Building, room 410D, 40 Waatera A*aoue, Augusta. ME 04330, Talephona: (207) 822- Maina. 
8271. 

Fitzhenry. William A., Boston Federal Office Building. 10 Causeway Street, raom 420 (Box 2), Boatoo. MA MasaachuaetU. 
02222-1036. Telephone: (617) 565-7235. 

Potter, Riu, v., 143 North Main Street, lulta 209. Concord, NH 03301, Triepbone: (603) 225-1624 New Hampshlie, Vermont 

Rossigool. aiSord )., 44 South Clinton Avenue, loom 703. Trenton, NJ 08609, Telephone: (609) 989-2192 New Jersey. 

Marshall. Harold J n, 820 Erie Boulevard West iulte 104, Syracuse. NY 13204, Telephone: (SIS) 423-6203 .., New York. 

Pecone, Anthony M., 1933A New Berwick Highway. Bloomsburg. PA 17815, Telephone: (717) 389-7560 Pcnnsyhranta. 

Qui, Ernesto L, Federal Ot&oe Building, room 620. ISO Carlos Chartlon A*enua, Hato Ray. PR 00918-1738. Puerto Rico. Vinbi It- 
Telephone: (809) 766-5187. lands. 

Noyes, Neal E, P.O Box 10229, Richmond. VA 13240, Telephone: (804) m-10«1 Vb^lnla. 

DavU, R. Byron. Roee Qty Piws BuUdinft, 550 Bagto Street, room 305. rh.ri^^ y/y 25301, Talephona: West VlimlnU. 
(304)347-6252. 



XLIV 

F»dtr>l Ragisler / Vol. U. No. 6/Mi«day,Juuwy 11, 1093 / NoUoM MIS 



SEATTLE REGIONAL OPFKZ 
iKksoD P«d«ml Buildln(. noo ISSe, SIS Second A*(aiM. SMttk. WttUi^lao M174. TaltphoM: (208) M9-0896 

Rlcben, Bambuti E Jr.. 805 Wm( 4tb Awnuc, room C-80. Aocbong*. AK 88S01-7tM, TalnboM: (M7) AlwU. 

271-2272. 
Pnot. C Antony, Federal Building, room 1406, 230 North Pirtt AvraiM. Phoanix, AZ ($025. Tdmboo*: (802) Ailioaa, Nevada (aaoept 

179-37S0. Bko. Eunka and White 

Pine Countiea). 

SoaMn. Deena R., 134S ) Stnet. tulM B. Secnmenlo. CA 85814. Telephone: (818) BS1-1S41 Qdifonla (aortbere). 

Lewis, WlUiam ]., 134S ) Street, tulta , Sacnnento, CA 85814. Telephone: (816) 551-2160 - GalUbraia (central). 

Oalu. Charlet W.. 11000 WUahin Boulevard, mom 11105. Loc Angelet. O 80024. Telephone: (310) 575-7288 CilUbmla (aouthem). 
MoCbeeney, Frank, P.O. Box 50264, Federal Building, room 4106. Honolulu. HI 86850, Telephone: (808) 541- HawaU. Guam, American 

3381. Samoa. Matthall Itlandi. 

Mlotmeda, Nortbani 

Ames, Aldred F...roaai 441. 304 North 8th Street. Boise. ID 83702. Telephone: (208) 334-1521 „ „ _._. Idaho. Nevada (oiuntie* of 

Elko. Eureka ft White 
Pine). 
Bartillnter. Anne S.. One World Trade Center. 121 S.W. Safanan Street, nilte 144. Portland. OR 87204. Tele- Oregon. 

phone: (503) 326-307C 
Buscb. )ay M.. )ackson Federal Building. 815 Second Avenue, room 1856, Seattle. WA 88174. Telephone: Wesblngton. 
(206) 553-4740. 

Dated: January 5. 1883. 
L. Jejrce Hamper*, 
Anittanf Secntoryfot Economic 
Devttopmtnt. 
IFR Doc 83-475 Filed 1-8-83: 8:45 ami 



XLV 



THE APPALACHIAN REGIONAL DEVELOPMENT ACT OF 1965 
EXPLANATION OF LAW AND PROGRAMS 



XLVI 



THE APPALACHIAN REGIONAL DEVELOPMENT ACT OF 1965 
(40 U.S.C. App.l) 

EXPLANATION OF THE LAW AND PROGRAMS 



The purpose of this legislation is to alleviate the poverty of the chronically 
depressed Appalachian Region by supporting a broad range of programs concerned 
with the economic, social and physical development of the Region. 
Organization 

The Act defines the Region as the entire state of West Virginia and parts of 
twelve other states - Alabama. Georgia. Kentucky. Maryland. Mississippi. New York. 
North Carolina. Ohio. Pennsylvania, South Carolina. Tennessee and Virginia. The area 
covers approximately 200.000 square miles in 399 counties and contains more than 20 
million people. 

The Act also created a new institution, the Appalachian Regional Commission 
(ARC), designed to ensure the Federal, state and local cooperation needed to achieve 
ARC objectives. It is a Federal-State governmental agency consisting of the 
Governors (or their alternates) of the 13 Appalachian States and a Federal 
Cochairman, appointed by the President with the advice and consent of the Senate. 
Each year, the State members elect an Appalachian Governor to serve as the 
Conunission's States' Cochairman. 

Commission members appoint an executive director to head the Commission 
staff. Because of the State-Federal nature of the Commission, staff members are not 
Federal employees. Staff serve the needs of both the Appalachian Governors and the 
Administration as represented by the Federal Cochairman. Commission expenses are 
shared equally by the Federal Government and the Appalachian States. 

The Federal vote assures a day-to-day spokesman for the national interest in 
ARC. The governors share a collective vote on Commission matters that equals the 
Federal vote. 



XLvn 

2 
Program Activities 

Under the Act. project proposals must originate in the States and be presented 
to the Commission. No project can be approved unless it is first approved by the 
State concerned. 

All recommendations of the Commission must be approved by a majority of 
the Governors and the Federal Cochairman. 

The Act sets out a blueprint for ARC's approach to economic development 
using several basic principles: 

o Private sector jobs are the program's ultimate goal and investments are 
made to support job creation and to qualify the people of Appalachia to fill them, 
o Federal-state-local cooperation is essential and ARC works with and 
helps fund local development agencies to strengthen local participation in the 
partnership. 

o A regional highway system is essential to open the Region to economic 
development and the Act provides for the design and construction of the Appalachian 
Development Highway System. 

o A comprehensive array of resource development, public facility, human 
resource and other area development programs complement the highway system to 
provide a base for industrial development. 

The highway program annually receives about two-thirds of ARC funds to 
provide for construction of the Highway System. States may also use some of their 
ARC funds to build access roads. This network supports development of commerce, 
industry and tourism, and enables the Region's residents to move freely between their 
homes and jobs, schools, health clinics, hospitals and other community facilities. 
Approximately 2,181 miles of the planned 3,025-mile highway system is completed or 
under construction. (See attached chart of the Appalachian Development Highway 
System.) 

Programs to support Area Economic and Human Resource Development consist 



XLvm 

3 
of grants for education and health care, water and sewer systems for industrial and 
residential needs, housing, child development, enterprise development, development 
of natural resources and research on topics directly related to the Region's economic 
development. Grants to undertake these programs usually are combined with local 
and/or state funds. ARC "supplemental grants" can be used by local communities to 
meet part of the matching share required by other federal grants-in-aid programs. 

Since 1965, ARC has helped build and/or equip more than 700 vocational 
schools and more than 1000 primary health care centers and hospitals and has help)ed 
build about 1,900 systems providing water or sewer services, or a combination of the 
two. 

A Distressed County Program helps the Region's 90 poorest counties meet their 
critical needs especially in such areas as safe drinking water and waste disposal. 

Regional Program Intitiatives encourage investment strategies to improve 
economic competitiveness, either to address a specific opportunity such as technology 
transfer, telecommunications, promotion of entrepreneurship. export development; or 
to help solve human resource problems such as school dropouts, adult illiteracy, other 
education issues, infant mortality, and inadequate rural health care. 
Local Development EMstricts (LDDs) 

The Commission, through its member states, achieves essential local 
participation by working closely with multi-county planning and development 
agencies known as local development districts (LDDs). LDDs cover all 399 
Appalachian counties and ARC provides a portion of the administrative funds for 68 
of these agencies. 

Each LDD has a board consisting of elected officials and public representatives 
of its member counties and a professional staff. Board and staff work with local 
citizens to assess local needs, determine local priorities and prepare development plans 
based on those needs and priorities. 

The local development districts have a wide range of responsibilities but all 



XLIX 



4 
have in common a number of general functions, including building the capacity for 
areawide economic development and the expertise to implement these plans through 
specific investment. 

They form an essential link between the people affected by ARC projects and 
those who make state and regional policies. LDDs each serve several counties that 
share economic potentials and problems, provide the local input to ensure that ARC is 
funding projects that directly address local needs. 
How Projects are Funded 

Authorizations for ARC funding expired as of September 30, 1982. However, 
funds are annually appropriated by Congress for ARC programs which are allocated 
by formula to the 13 states. 

To carry out ARC program objectives, the Governor of each state is reponsible 
for developing a plan identifying specific projects that will receive ARC funds, 
usually in combination with other Federal or state programs or local funds. The 
Commission must approve annually each State's development plan and project 
package. 

State plans are submitted to ARC at the beginning of each fiscal year and 
considered by the Commission at its winter meeting. During the spring, states submit 
project applications for ARC staff review. As projects are cleared, they are 
forwarded to the ARC Federal Cochairman for final approval. 

An exception is Commission-sponsored research and ARC's annual budget 
includes a specific amount for research activities. A Research Committee of state 
alternates meets through the year and proposes topics to the Commission closely 
related to ARC's economic development strategy. ARC publishes Requests for 
Proposals to solicit research on each of the approved topics. 



Appalachian Development 
Highway System 




u 



October 2. 1992 

APPALACHIAN REGIONAL COMMISSION APPROPRIATIONS 
(In Millions of Dollars) 

tNo breakout for highway/non-highway programs 
and salaries and expenses] 







CRANIMOIAL 


PX.-514 (Energy 

and Water) 
P.L.101-516 (DOT) 


$170,000 • 
H750- 


$264,750 


P.L.102-104 (Energy 

and Water) 
P.L.102-143 (DOT) 


S190.000 # 


$338,500 


P. L. 102-377 


smoom 


$190,000 



• FY '91: PL. 101-514 (Eiwrfy k W»tef) 

Fund* •armarlMd from tl70 M: 

S21.5 - Corridor coi«itruction, Alabama 
13.0 - Corridor construction, Mitsitiippi 
38 - Corridor C W«it Virfinia 
$72.5 Total for Highways 

% Community frvicti facility Millaort Aii 
$73.3 Total tarmarkcd 

- FY '91: PL. 101-516 (DOT) 

Funds earmarked for Appalachia: 

$51 5 - Corridor H, West Vir(inia 
33 275 - Corridor G , West Virginia 
10 - Corridor D West Virfinia 
$94,775 Total earmarked 

# FY '92: PL. 102-104 (Conf.Rept.H Rpt.102-177) 

Funds earmarked for Appalachia: 

$27.7 - Corridor in Alabama 
16.3 - Corridor in Mississippi 
58 - Corridors G LH West Virfinia 
$97.0 - Total for highways 

4 - Tourism deyelonment Concord Collete. W.Va. 
$97.4 Total earmarked 

## FY '93: P.L. 102-143 (DOT) Funds earmarked 
for Corridor G Improvement Program. 

« FY '93; PL. 102-377 

Funds earmarked for Appalachia: 

$36.0 - Corridor in Alabama 

$47.0 - Corridor L in Wtit Virginia 

$83.0 - Total for highways 

$ SO - Construction of water resources development project in Ritchie County, WV 

$ 5.0 - local access roads in Mississippi including access road at Holly Springs 

t 4 - continue tourism dev elopment work in accordance with S Reot. 101-378 

$93.4 - Total earmarked 



LII 



HEARING BEFORE THE 

THE SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 

COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION 

U.S. HOUSE OF REPRESENTATIVES 

Thursday, May 20, 1993 
9:30 a.m. 

ROOM 2167, RAYBURN HOUSE OFFICE BUILDING 



AGENDA 

To receive testimony on the administration of the 
Economic Development Programs and recommendations 
for the revision of the Public Works and Economic 
Development Act. 

WITNESSES 

Panel Michael Reese, Executive Director 

Mohawk Valley Economic Development District 
Mohawk, New York 

Mr. R. Frank Lee, Executive Director 
Mason County Development Authority 
Point Pleasant, West Virginia 

Panel Craig M. Smith 

Acting Assistant Secretary 

Economic Development Administration 

Washington, D. C. 

Steven R. Brennen, E)irector 

Denver Regional Office 

Economic Development Administration 

John E. Corrigan, Director 
Philadelphia Regional Office 
Economic Development Administration 



TO EXAMINE EXISTE^G PROGRAMS UNDER 
THE PUBLIC WORKS AND ECONOMIC DE- 
VELOPMENT ACT OF 1965 AND THE APPA- 
LACHIAN REGIONAL DEVELOPMENT ACT OF 
1965 AND TO CONSIDER PROPOSALS TO RE- 
AUTHORIZE THE PROGRAMS AS WELL AS 
NEW INITIATIVES TO PROMOTE GROWTH 
AND DEVELOPMENT 



THURSDAY, MAY 20, 1993 

House of Representatives, 
Subcommittee on Economic Development, 
Committee on Public Works and Transportation, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:50 a.m., in room 
2167, Raybum House Office Building, Hon. Robert E. Wise, Jr. 
(chairman of the subcommittee) presiding. 

Mr. Wise. This hearing of the Subcommittee on Economic Devel- 
opment will come to order. 

Good morning. 

Today the Subcommittee on Economic Development is beginning 
a series of hearings to review and reauthorize the programs admin- 
istered by the Economic Development Administration, the EDA, 
under the Public Works and Economic Development Act of 1965 
and those administered by the Appalachian Regional Commission, 
the ARC, under the Appalachian Regional Development Act of 
1965. 

As you know, the authorizations for these two programs expired 
September 30th, 1982; but the programs have continued to be fund- 
ed annually through the budget £ind appropriations process. In 
each Congress since the 97th Congress, the Public Works and 
Transportation Committee has reported out bills to reauthorize and 
£imend the EDA and ARC programs that have passed the house 
overwhelmingly. 

This marks the seventh Congress that the committee has initi- 
ated action on this legislation. It is my belief that the present ad- 
ministration not only recognizes the value of these development 
programs and the need to continue them, it has also included funds 
in the President's budget request for fiscal year 1994 for both EDA 
and ARC. 

Let me say that it is the Chair's feeling that since their creation 
in 1965, the EDA and ARC development progrsuns have supported 

(1) 



local and state activities, encouraged private sector involvement in 
projects that have addressed a variety of economic problems, 
helped innumerable distressed communities and industries. And 
they have been effectively assisted in promoting economic renewal. 
But there needs to be a clearer statement of mission and purpose. 

And I think this is a good time to reexamine the focuses of these 
agencies and what their roles should be in the future. In this re- 
gard, last month, my staff and I personally met with, in my dis- 
trict — and I would urge other Members who may wish to do the 
same to do likewise — have met in my district with various officials, 
economic development experts, business persons, and informal 
round table sessions in Charleston and Elkins, and we will do the 
same this Monday in Martinsburg, to learn about their experiences 
with the EDA and the Appalachian Regional Commission. 

We have heard both their successes and some of their concerns. 
We have heard suggested program changes such as greater flexibil- 
ity for the tj^es of local projects eligible, permit changes in scope 
of projects, local certification and accountability. More technical as- 
sistance, less paperwork, and faster processing of applications. I 
anticipate including a summary of these discussions in these print- 
ed hearings. 

(Notes from statements of presenters, Charleston, WV, April 23, 
1993, see page 51; Elkins, WV, April 23, 1993, see page 60; and 
Martinsburg, WV, May 24, 1993, see page 67.) 

Mr. Wise. It is my hope that during the series of hearings that 
begins today, we can hear these same kind of concerns. It would 
be my hope to develop a two-year bill and include amendments to 
address criticisms and difficulties with the programs that have 
been brought to the committee's attention. 

I also hope that, as we work on a bill, the administration will 
make known its approach to reauthorizing EDA with suggested 
amendments based on their open review of the programs so we 
may coordinate our efforts. 

Testimony on this first day will focus on the Economic Develop- 
ment Administration. Our witnesses include three officials from 
that Agency: Mr. Craig Smith, the Acting Assistant Secretary for 
Economic Development; Mr. Steven Brennan, Director of EDA's 
Denver Regional Office; and Mr. John Corrigan, Director of the 
Philadelphia Regional Office. 

We will also here from Michael Reese, Executive Director of the 
Mohawk Valley Economic Development District in New York and 
Frank Lee, Executive Director of the Mason County Development 
Authority, Point Pleasant, West Virginia. 

I particularly appreciate the developers coming, those involved in 
economic development as a profession, because they are the ones 
who work in the trenches, work on a day-to-day basis with the 
many programs that are designed to encourage economic develop- 
ment. We wanted to have them lead off because I think they can 
give us some practical suggestions. 

Let me just say ad hominem, that is where I get into the most 
trouble; that it is not my interest to simply reauthorize existing 
programs that have been in existence since 1965. 

It is my intention that the subcommittee will take a very in- 
depth look at these programs, at where they are effective and per- 



haps where they have not been effective, and that we can address 
some of those concerns. I am deeply committed to both of these pro- 
grams. 

Every indication is that the administration intends to make, par- 
ticularly the EDA, a focal point in its economic development initia- 
tives; but there is no reason to simply plod ahead as we have been 
without a thorough examination. 

It would be my hope that in this panel — these panels and panels 
to come — that people would make specific suggestions based on 
their experience about where improvements can be made. I am par- 
ticularly interested in hearing about accountability. Is there some 
measure for marking how well we are succeeding in certain areas? 

For instance, in the various titles that EDA has under its juris- 
diction, is there an ability to determine what works and what 
doesn't, what projects seem to have had success, what haven't; and 
is the funding, then, moving towards those projects with a success 
record? 

I just want to make sure that dollars aren't being put out there 
that aren't being accounted for that are simply — but instead are 
simply being put out there because it is on the books. And so that 
is the spirit in which we enter into this. 

I appreciate very much the bipartisan cooperation that we have 
had putting these hearings together and look forward to working 
with all parties here. 

Before recognizing the Ranking Member of this Subcommittee, 
Ms. Molinari, I would like to insert into the record at this point 
statements received from our colleagues, Mr. Costello of Illinois, 
and Mr. Blackwell of Pennsylvania. 

[Statements referred to follow:] 

Statement Hon. Jerry F. Costello 

Mr. Chairman, I want to thank you for calling this series of hearings to examine 
existing programs under the Public Works and Economic Development Act of 1965 
and the Appalachian Regional Development Act of 1965. The Committee will also 
consider proposals to reauthorize the programs as well as new initiatives to promote 
economic growth and development. 

I am particularly interested in improving the grant programs of the Economic De- 
velopment Administration. In my (Jongressional District in lUinois, in the town of 
Anna, two maior factories which employ most of the population have recently shut 
down. Unemplo5mient is this area of Southern Illinois is widespread. I know that 
county officials are working with EDA to determine what directions they should ex- 

Elore to help address the economic problems of the community. While EDA has been 
elpful, we, as a Committee, need to look at ways to modernize the programs and 
ensure that the assistance is being directed in the best ways possible under the cir- 
cumstances. 

I look forward to hearing the testimony of the witnesses who will testify today 
and hope to learn of positive suggestions and recommendations so that the revision 
of the Economic Development Programs will provide the most benefit to the eco- 
nomically devastated communities across this nation. 



Statement of Congressman Lucien E. Blackwell 

Thank you, Mr. Chairman. First, I would like to take this time to applaud you 
and my other colleagues for your continued support of these two vital programs. It 
has been 11 years since full reauthorization, ana I believe you are committed to the 
cause and efforts of the Economic Development Administration (EDA) and Appa- 
lachian Regional Commission (ARC). 

Now, we have the mechanics and the tools to bring these prograuns to full working 
order. The American people elected President Bill Clinton on the hopes of change 



from the previous administrations, which had determined that these programs 
should be abolished. I am at a loss as to how it was determined to abolish programs 
that have been proven to be effective to our local communities and regions. 

I am most eager to learn how we can, as a legislative body, begin to modernize 
the EDA and ARC, so that we can put the American people back into the workforce 
and reverse the long-standing deterioration of our Nation. 

Today's hearing is the first of many hearing we will begin to decide whether to 
continue or not to continue the work of these programs. At the same time, we must 
remember to take a reasoned and careful approach as we consider the issue before 
us. 

What's more, we must, in any event consider most favorably any measure which 
emphasizes as paramount the economic well being of our local communities and re- 
gions. 

We must also be sure that any program or concept we enact to improve the EDA 
and the ARC offers reliability and awareness to the communities that are to be 
served. 

I have no doubt that we are capable of making a fair determination of what steps 
can and should be taken to allow the EDA and the ARC to reach their full potential 
in overcoming the many obstacles they are currently facing. This subcommittee will 
play a vital, as well as important, role in making that determination, and I applaud 
you for your leadership, Mr. Chairman, in this process. 

I welcome the witnesses who will appear before us today and await their testi- 
mony. 

Thank you, Mr Chairman. 

Mr. Wise. Now, I will turn to Ms. Molinari. 

Ms. Molinari. Thank you, Mr. Chairman. And let me thank you 
for holding this hearing today. I also support the reauthorization 
of the Economic Development Administration and hope we can use 
this opportunity as you suggest to breathe new life into EDA. 

I am looking forward to hearing the testimony of all our wit- 
nesses, but I am particularly pleased that Mr. Michael Reese of the 
Mohawk Valley Economic Development District is joining us. The 
work Mr. Reese does is extremely important to communities in 
Central New York. 

Congressman Boehlert, who represents this district, is going to 
try and join us so he can be a part of this very important day today 
and sends his personal best to Mr. Reese in his absence. 

Those of us who support the EDA and economic development ini- 
tiatives must understand exactly what is happening in our econ- 
omy and, as you suggest, adapt our programs to that change. We 
have to reexamine our strategies to make sure they will be effective 
in the long term. 

A recently released study funded by the EDA pointed to two 
questions that must be addressed as we focus our resources: num- 
ber one, how do we reshape our efforts to reflect the changing eco- 
nomic environment since 1965; number two, where do we get the 
resources to refocus these programs? 

As policymakers, we have to begin to rethink how local action 
should address the changing economic order. Issues such as trade 
deficits, America's educational system, urban decay, and declining 
Federal defense spending are all issues that have local, national, 
and international implications. 

Our economic development strategy must consider these matters. 
How can we target our resources where they will be most effective? 
Are local economic development programs addressing the chal- 
lenges of tomorrow? Or have communities inherited programs that 
are really designed for yesterday's problems? 



There probably will not be too many additional funds to help ac- 
complish these new initiatives. We will need to eliminate activities 
that are no longer relevant and redeploy the resources in activities 
that can have long-term impact on local, regional, and national 
economies. 

Mr. Chairman, I believe EDA can be revitalized to help commu- 
nities and businesses compete in the global marketplace. As this 
reauthorization proceeds, I hope we will all keep in mind that our 
economic development strategies must change to suit the new busi- 
ness climate. Companies are no longer deciding whether they 
should locate a facility in Brooklyn or Baltimore. The decision is 
now between looking at England, Brussels, Baltimore, and some- 
times Bangladesh. 

Again, Mr. Chairman, thank you for arranging this hearing 
today. And the two panels of witnesss you assembled, I believe, will 
help us to start to sort out from back in the days of the initial au- 
thorizations to today and the difficult issues we need to deal with. 

Mr. Wise. I thank the Ranking Member and turn to Mr. Baker 
of California for any opening remarks. 

Mr. Baker. No, thank you, Mr. Chairman. It is a pleasure to be 
here. 

Mr. Wise. Gentlemen from Florida, Mr. Mica. 

Mr. Mica. No comments. Thank you. 

Mr. Wise. Gentleman from New Jersey, Mr. Franks? 

Mr. Franks. No opening this morning. Thank you, Mr. Chair- 
man. 

Mr. Wise. The gentlemen from California, Mr. Kim? 

Mr. Kim. No, Mr. Chairman. 

Mr. Wise. There is a new precedent being set in this subcommit- 
tee. I want to applaud someone for it. Try to extend it to the other 
side as well. As you can see, no comments from this side. I guess 
we are ready to proceed. 

I now ask the first panel to come forward, Mr. Lee of West Vir- 
ginia. Frank is the Executive Director of the Mason County Devel- 
opment Authority, from Point Pleasant; and Mr. Michael Reese, 
Executive Director Mohawk Valley Economic Development District 
Mohawk, New York. 

And, gentlemen, each of your written statements will be made a 
part of the entire committee record, so please feel free to summa- 
rize in any way you wish. 

I would just like to take this opportunity to introduce Mr. Lee, 
whom I have had the privilege of knowing for a number of years, 
who has been very active in economic development. I consider him 
to be one of the real stars in our State for his involvement. And 
if there is ever a guy who can pull together the private and the 
public sectors better than Frank Lee, I haven't met them yet. A lot 
of ingenuity and a lot of ideas and enthusiasm. And so I very much 
appreciate his taking the time and effort to be here. 

And Mr. Reese, I want you to know that you come highly rec- 
ommended. I had a chance to meet with Congressman Boehlert 
earUer this morning in another function. He does want to try to get 
by here, but he was singing your praises greatly. 

And we are very glad to be able to work with Sherry, who was 
has been involved with the EDA for many, many years. 



At this point, I think, Mr. Lee, if you don't mind, in case Mr. 
Boehlert comes, Mr. Reese, if you wouldn't mind going second. And, 
Mr. Lee, I will ask if you will start. 

TESTIMONY OF FRANK LEE, EXECUTIVE DIRECTOR, MASON 
COUNTY DEVELOPMENT AUTHORITY, POINT PLEASANT, WV; 
AND MICHAEL REESE, EXECUTIVE DIRECTOR, MOHAWK 
VALLEY ECONOMIC DEVELOPMENT DISTRICT, MOHAWK, NY 

Mr. Lee. Thank you. 

Mr. Chairman and Members, it is an honor to be here. 

I am a native Washingtonian, and I used to come to these build- 
ings as a student. I never thought I would be actually sitting here, 
and I am a bit nervous this morning. So bear with me. I certainly 
don't have a great expertise of the technical details of this program 
but rather, I hope, some practical experience on the developer side 
of working With it. 

I want to say right off the bat, I believe it is an extremely impor- 
tant and valuable program. It is essential for economic develop- 
ment particularly in non-urban areas, without question. I don't 
think anyone would challenge that. 

I think what I would say to you is time, money, and resources. 
The program was designed as an effective tool, but it could be more 
effective. Probably the single trend that I found in talking with my 
fellow developers is timing, timing. 

If I have got a project that will create jobs, and we know it will 
create jobs and a private sector individual that wants to invest 
money in my community, by the time we foimd a site, they have 
been through allocation study — ^by the time they get to that point 
they are ready to go. 

And if I am going to involve EDA funding, what we normally tell 
them is when they say how long, we say it is about the same as 
having a baby; it is nine months to get the approval and that is 
at the earliest. And then we are going to go through — ^we are going 
to advertise under the Federal regulations, the non-programmatic 
guidelines, for engineers and architects and other things. 

The bottom line is, I can bring nothing to the table for a year 
in most cases. And then I have got to, in most cases, tell that cli- 
ent, by the way, you can't commence your project until we finished 
all this or portions could be ineligible, especially if we package with 
other programs. 

My suggestion on that would be to take a hard look at reviewing 
authority. It has doubled up. You have got layer upon layer, at 
least two detailed reviews. Other Federal programs require certifi- 
cation on drug fi*ee workplaces or environmental sign-offs, et 
cetera. These programs, in most instances, require the documenta- 
tion attached. And in each level of review, if an "I" is not dotted 
or a "T" is not crossed, it stops and gets recycled. 

I think if it is the intent of Congress to have these programs 
focus upon situations that will create jobs rather than have the po- 
tential to create jobs, that will cause something to be built and peo- 
ple to be employed rather than another study that sits on a shelf 
to gather dust. I believe the review authority could be brought 
down to 60 days instead of nine months. And I believe that with 



all my heart. And I think the experts from the agency will probably 
concur with that assessment. 

Secondly, I think there needs to be additional staffing. In my 
State, we have one human being who has an office with a fax, I 
hope. I think they got a fax now, a telephone, and a computer. And 
the papers are piled up and the phone rings off the hook. We got 
50-something counties, and this person has to individually review 
and prioritize each individual project. It is virtually impossible. 
Virtually impossible. 

You take the best employee in the world, no one can handle that 
kind of work load without secretarial assistance. It is just, I think, 
too much. And I must say, in talking with my fellow developers, 
I didn't receive complaints at that level. They said the work got 
done, work was turned out in a timely manner. I just don't know 
how the individual does it. I think he is exceptional. 

I heard the comment this morning dealing with accountabiUty. 
And for my l£ist comment, I simply would like to say I agree with 
that wholeheartedly. Congressman Wise, you remember when you 
were involved in starting an economic development program in 
Montgomery, West Virginia; and we went down and did some work 
down there with those folks. And I remember sitting in with them 
at your request to hire an executive director. And a personnel man- 
ager who thought he knew about economic development screened 
the applications. 

We interviewed 12 people that day, and not one of them had ever 
put a deal together, not one of them had ever actually located an 
industry or done an incubator project. But they had all done lots 
of studies and analysis and feasibility studies and had a long list 
of credentials. 

I think — and we kept asking the question over and over, tell us 
about the last three deals you put together, tell us how many jobs 
you have created, give us the names of some corporate officials we 
have talked to that you worked vntti in economic development. And 
these were all well-quahfied people, but they had never put a deal 
together. They had studied economic development; they didn't prac- 
tice it. 

So my plea, whenever I am asked for my comment on what we 
can do in economic development, is to get back to the basics. I 
loved the comment I heard this morning about accountability. I 
thought that was fantastic. And this may be an over simplification. 

They may get by you the first time, but on each and every doUsir 
that you send out, I would ask the questions, document the impact, 
not the potential impact, document the impact. What brick sinci 
mortar? What infi-astructure created? Was it done within the ap- 
propriate time fi*ame? How many jobs were created? Not — and it is 
interesting, I always love Federal programs. 

When I go to my board of directors, they want to know how many 
jobs will be created with this project. And they are talking about 
in the first week. When I deal with State and Federal programs, 
there is always, "Please list the number of jobs to be created in the 
first three years." So we are dealing in theoretical jobs and theo- 
retical numbers. 



8 

I would say tighten it up, and say how many jobs are going to 
be created on Day One; how many on Day Two; and take it on out 
from there. 

The further that time line goes, the more suspicious you should 
be. Accountability, I think that is the key word along with timing. 

Again, I apologize to this group. I am not accustomed to this kind 
of a setting. I am sort of a nuts and bolts guy, and I hope I haven't 
said anything that was terribly improper today. It is a real honor 
to be here as an economic developer, and I thank you from the bot- 
tom of my heart for letting me come. 

Mr. Wise. No. We greatly appreciate your being here. And you 
have done an excellent job in front of this committee. 

And, Mr. Lee, the only committee I sometimes caution you 
against appearing in front of would be the Judiciary Committee. 
There, you are in trouble. But with all the other committees no. 
Thank you very much. You have given us — ^well, I am going to wait 
until questions, but I have been writing frantically. 

Mr. Reese, we appreciate your attendance here. And as I say, 
Congressman Boehlert, who has been a stalwart on behalf of the 
EDA, has spoken very highly of you. We look forward to your testi- 
mony. 

Mr. Reese. Thank you. 

Mr. Chairman and Members of the Subcommittee on Economic 
Development, my name is Michael Reese, and I am the Executive 
Director of the Mohawk Valley Economic Development District. 

It is my opinion that the reauthorization of the EDA is one of the 
most important components of any economic recovery plan that is 
considered by the Federal Government. The most critical problem 
facing America today is providing jobs for its people. If this country 
is going to win the war against crime, drug abuse, spouse and child 
abuse, and poverty, it is going to have to provide long-term, good 
paying jobs for its citizens. 

During just the past few years, without reauthorizing legislation 
and without adequate resources, EDA has continued to be a strong 
partner in the economic development of the Mohawk Valley Region 
of New York State. 

My region is predominantly rursd in natvire and suffers from dec- 
ades of economic decline. By utilizing EDA to fund the necessary 
infrastructure improvements for industrial development, we have 
begun to stem this tide of decline. We now have hope for economic 
growth in the future. But the job is far from finished. 

There are still many unmet needs that have to be addressed if 
this region is going to provide jobs for its residents. Now more than 
ever, we need to have the continuation of the EDA, which can and 
should play a central role in providing economic development re- 
sources to projects that will help retain jobs and create jobs for the 
unemployed and underemployed. 

I would like to take some time to discuss three aspects of the 
Economic Development Administration that I think deserve consid- 
eration in the reauthorization bill. 

The first is a present system of using the economic development 
districts to access programs of the agency. With the assistance from 
an EDA planning grant, my five counties worked together to de- 



velop a strategy £ind identify projects in our annual, overall eco- 
nomic development program. 

The "carrot" of having their projects eligible for EDA funding has 
kept the region working together, something that would not con- 
tinue if the present system were eliminated. 

The concept of regions working together collectively to solve prob- 
lems and implement strategies is one that works and should be en- 
couraged to continue. This system allows each region to set its own 
priorities and seek funding for projects that will provide real eco- 
nomic benefits to the area. 

The regional economic development planning performed by eco- 
nomic development districts is one of the only ways that local gov- 
ernment officials, many of whom are part-time, have input into a 
regional strategy that provides a coordinated approach to future 
development. 

One concern that we do have to deal with is a lack of adequate 
financing for the District Planning Grant Program. As an example, 
my district has received the same level of assistance each year 
since 1986. EDA staff has done its part by providing planning 
grantees with new OEDP regulations, in the spring of 1992, that 
will make our annual strategy even more useful. 

Now we need to increase the appropriation for planning grants 
so that districts can continue to provide the appropriate level of 
service to their regions. 

Another vital aspect of the EDA is its Title I Public Works Pro- 
gram. This has been EDA's bread and butter program, and it is as 
important today as it was when the agency was foimded. One of 
the most difficult challenges faced by local governments is their 
ability to develop good quality public infrastructure for industrial 
development. 

A community's ability to retsiin or attract industries is directly 
tied to its ability to provide those public services at an affordable 
cost. 

However, in regions that have experienced a lack of economic 
growth, such as the Mohawk Valley, local governments cannot af- 
ford these improvements without assistance from agencies like 
EDA. 

A recent project in the City of Johnstown in Fulton County is a 
good example. Johnstown was under a consent order fi*om the pub- 
he health department to filter its water. TTie construction cost of 
a filtration plant was $7.7 million. If Johnstown had to bear the 
entire cost of this project, the cost of water to the 11 industries lo- 
cated in the city would have been at a rate that would have caused 
many to close their facilities, adding hundreds of workers to the 
ranks of the unemployed, in a coimty with an imemployment rate 
of 10 percent. 

The solution was assistance from EDA. The city was awarded a 
$2 million pubUc works grant. With this partnership between the 
local government and the Federal Government, the public health 
standards were met and Johnstown would be able to retain its 
largest industrial sector. 

One area of the Title I program that needs to be improved is the 
time it takes from the submission of a pre-application until final 
approval. 



10 

Many of the things Mr. Lee has addressed before in his testi- 
mony are the same with my region. I understand the agency is cur- 
rently working on streamlining the system. That would be most 
welcome to people at the local level. 

Many times communities need a prompt response to their appli- 
cations, and the present processing time can become an obstacle for 
projects that need to be moved forward more quickly. 

However, I do not believe that the application process itself is 
broken. The use of the pre-application allows a community to seek 
assistance without incurring a great deal of upfront cost. It also al- 
lows the agency the ability to rate projects and invite the most 
worthwhile projects to final application. 

And, again, I agree with Mr. Lee, one of the most effective as- 
pects of the present system is the use of our state economic devel- 
opment representatives. Our state EDR is an invaluable service not 
only to the district but to the applicant communities. 

This program, like the planning grant program, is severely un- 
derfunded. Currently, my five-county region has approximately 
$100 million worth of public infrastructure projects that, if funded, 
could provide a direct economic benefit to my region. 

These commimities are in competition for a nationwide appro- 
priation of some $136 million of public works funds. 

As I mentioned earlier, the EDA is uniquely positioned to play 
a vastly expanded role in providing Federal economic development 
resources to local projects. I would recommend that Congress look 
very closely at all Federal agencies that have some economic devel- 
opment activity and determine if it would be more appropriate for 
the Economic Development Administration to carry out this activ- 
ity. 

I am not being critical of the agencies; however, it seems to me 
that if the primary focus of an agency is housing, then it should 
direct its attention to housing; if the primary focus is agriciilture, 
then it should direct its attention to agriculture; and if the primary 
focus is economic development, as is EDAs, then it should handle 
the economic development programs. 

This may be a way to increase the appropriation with Title I 
public works programs without adding new spending to the budget. 

The third aspect of the reauthorization bill that I would like to 
comment on concerns the EDA revolving loan fund program which 
is part of the Title DC program. Our district has administered an 
EDA revolving loan fund since 1979. With approximately $1.6 mil- 
lion of EDA funds, we have been able to fund 132 companies with 
$5.5 million in loans which has leveraged an additional $39.5 mil- 
lion in private sector loans. 

These projects have created real jobs for 3,000 people. And we 
count those jobs on an annual basis with site visits to these busi- 
nesses. 

When you divide those $5.5 million in loans by the 3,000 jobs, 
the result is a job cost ratio of $1,833 per job. By comparison, most 
economic development programs at the State and Federal level 
gauge their success by using job cost ratios that range from 10,000 
to $35,000 per job. 

Locally controlled revolving loan funds have become one of the 
most effective tools available to stimulate effective job creation in 



11 

small businesses where most of the growth in jobs is taking place. 
This is particularly true in areas of stagnant growth because there 
is a general lack of interest from the private sector financial insti- 
tutions in these areas. 

As banks have consolidated and regulators have become more 
strict, small business people are having a more difficult time ar- 
ranging all their financing fi-om the private sector. By using EDA 
revolving loan fund as a financier, we have been able to package 
deals with the private sector that, in other words, would not meet 
their underwriting requirements. 

The EDA revolving loan fund is a natural complement to the 
Title I program. Title I provides the public infi*astructure necessary 
for development and the RLF provides the capital to allow compa- 
nies to expand and complete jobs. 

In conclusion, I want to stress the necessity to reauthorize EDA 
this year. I strongly urge you to include in the reauthorization bill 
the economic development district program. Title I program and 
Title DC programs in substantially the same format as now exist. 

I thank you and will answer any questions you may have. 

Mr. Wise. Thank you very much, Mr. Reese. 

Let me reference the last part of your presentation. You mention 
the revolving loan fund which seems to be similar to that which 
Farmers Home — now RDA administers. You described the two pro- 
grams as similar. They have a fund that can also be administered 
that can be loaned out to businesses and then paid back? 

Mr. Reese. They are similar in nature. Farmers Home Program, 
I do not administer one myself; but I understand they have what 
was referred to as re-lenders program, where they loan you the 
money; you use it to make loans to your businesses; and as it gets 
paid back, you pay back the Farmers Home Administration. 

Our money, as it revolves, stays in the local region; and we re- 
port back to EDA on a semiannual basis of our results and then 
also annually by audit through the EDA and Inspector General's 
office. 

Mr. Wise. I wonder fi-om both of your all standpoints as devel- 
opers — I went through a hst suppHed by the Congressional Re- 
search Service the other day of all the different development pro- 
grams imder different agencies; and lo and behold, they start look- 
ing fairly similar. Is there some difficulty in not truly having one 
stop shopping? 

One of the complaints I also heard is that you are often having 
to put together deals that match programs as opposed to matching 
programs to deals. 

If anybody would care to comment on that. Let the record show 
Mr. Lee nodding an enthusiastic affirmative. 

Mr. Lee. That is absolutely the case. Without question, it goes 
on all the time. You don't go in with your client and say this is 
what we want to do. You go see the consultant or the person that 
has the expertise in the regs, and they tell you what the program 
requirements are. And then you mold your program to fit that. And 
that is the way the game is played. Absolutely. 

There is one thing, though, Congressman. I agree completely, 
there are some duplicative functions out there. One thing about 
EDA that is unique, though, and I have heard both criticism, both 



12 

good and bad about this, but in my State, and I am sure in other 
States, that individual has prioritization authority. 

Now, some people will tell you that that does not allow state gov- 
ernment to include EDA in their overall economic strategy and that 
it puts EDA outside the scope and the control and the purview of 
that overall strategy and that these folks are given other Federal 
funds. 

Other folks would tell you that EDA is the one program where 
they can go direct and stand on their merits and make their case 
and get funding. 

So, in essence, by having that authority, that prioritization au- 
thority there, it removes an entire level of bureaucracy to get in the 
game at the state level. 

And, as I say, there is comments on both sides. But I don't think 
it is such a bad thing to let people have direct access and stand 
on the merits. And I hope that would be maintained. 

Mr. Reese. Just one comment concerning the different programs 
from different agencies. I think when — again, I don't run a Farm- 
ers Home fund, so I am not that familiar with their regulations. 

But with EDA's revolving loan funds, we are restricted to serving 
that depressed or distressed area that we have as our district, 
whether it be in rural parts of my region or in more urban parts 
of my region, places like the City of Utica. And I think that flexibil- 
ity that we have to fund projects that are in need, regardless of lo- 
cation, is a flexibility that we would need to continue to have in 
our region, 

I thmk, too, that the ability to keep that money locally revolving 
in our region has also been very helpful so that we know from year 
to year that we are going to be able to fund a certain number of 
projects. If we lose that capital over a number of years, we are 
going to have to supplement that with something else. 

The third comment I want to make is, what we are looking at 
with an EDA revolving loan fund is serving businesses that are not 
able to receive financing from more conventional sources. We pur- 
posely look for higher risk deals, deals that would not go forward 
except for the financing that we are able to put into the project. 
And I think in those cases, again, we are answering the problem 
of a distressed area that does not have a capital base necessary for 
deals to take place. 

Mr. Wise. That is a problem, and I want to take it up some when 
EDA testifies some. We would all like to see the process move 
quicker. In fairness, if they can get conventional financing readily, 
then it is already done; they don't come to you and EDA. So there 
is a question of stewardship of Federal taxpayer funds. 

But the question is whether you can work a balance out that you 
can get quicker resolution than is the case on accountability. And 
perhaps this is something that you want to respond in writing as 
opposed to simply off the top of your head. 

Do you have some suggestions on how success or results, at least, 
can be measured? 

The EDA will testify shortly about their quality action teams. 
But for instance, in the different categories, the university center 
program, the technical assistance program, the public works pro- 
gram, are there benchmarks that can be used that, to your knowl- 



13 

edge, are presently not being used or at least you think should be 
looked at? 

Mr. Reese. My personal opinion, I would like to see the univer- 
sity program tied more closely back to the districts that are set up. 

I worked at a university center in the late 1970s and early 1980s 
in Plattsburgh that served the northern part of New York State. 

When I was there, we worked very closely with the districts on 
specific projects, and accountability was fairly easy because we 
could show you the projects that we worked on during the course 
of a year. 

What I have seen in the past few years is that the program has 
gotten further away from the districts as far as the working rela- 
tionship and their giving us assistance on our projects. 

The accountability that I see that EDA does have, particularly 
with the public works projects that we have, that I think is better 
than most other Federal agencies, is that we are more project spe- 
cific. I mean I can show you the bricks and mortar; I can show you 
the industrial park that we built with the businesses in it, as op- 
posed to the more entitlement-type programs where the money 
flows and very hard to tell exactly where the money was used in 
a community and what benefit that provided to long-term job 
growth in that community. 

Mr. Wise. Mr. Lee? 

Mr. Lee. If Mayberry wants to do it, Andy and Opie and Aunt 
Bea can get a grant from all kinds of Federal agencies; and they 
can get a consultant from inside the Beltway and they are the real 
good ones, or they can go to a university center. 

There seems to be a philosophy throughout the Federal system 
that I have noticed that we must put into place mechanisms, uni- 
versity centers, and other things, where we have all this expertise 
to help these communities that have no expertise to succeed in eco- 
nomic development. 

And, yet, everyone agrees that to be successful, economic devel- 
opment should be implemented and can be implemented most effec- 
tively at the local level. But we don't do what we say. 

For example, when I came to Jackson County Congressman, and 
you helped me get that park built, they had five grants and five 
studies. I think once a month they went in and dusted off the stud- 
ies and read them and talked about what they could do. What they 
didn't have was any brick and mortar. 

So we built that park, put five businesses in it, and you go for- 
ward. But what did it take? They had to have— they didn't need 
money for a consultant. They didn't need advice fi*om any univer- 
sity center. They needed their own economic developer. That is 
what they needed, on a regional basis, county basis, whatever, a 
professional. 

And that is the one comment I would like to stress to this com- 
mittee. What can you do? 

We put the authority for creating jobs into organizations under 
the premise that they must provide this expertise to the local or 
regional efforts. You know, it has always struck me as funny, if I 
^vant to sell a house, I have got to have, in every State in this Na- 
tion, a license; I have got to take a test to sell a single-family 



14 

dwelling, because we recognize the equity in that house is probably 
the most significant investment that family has. 

And then, if I am going to run a real estate office, I have got to 
have more experience and have more testing done and become a 
broker before I can sell a single-family dwelling. 

But we will turn right around and let someone bump their head 
on a rock and suddenly decide they have become an economic de- 
veloper, and they can be responsible for the success or failure of 
the major employer in that small town U.S.A., and without any re- 
quirement of professionalism whatsoever, 500, a thousand people 
may lose their jobs. And not only those single family dwellings, but 
an entire community is economically devastated. 

I guess what I am saying is, I would urge you to find a way to 
put funds not into bureaucracies but give local commimities the 
ability to band together into geographic scenarios that make sense 
and hire professional, underline the word "professional," economic 
developers. 

I think what you will find is, is where there are true professional 
economic developers, not people that bump their head, you are 
going to find that you will have good projects and you will get the 
kind of return on the tax dollar that you would like and the kind 
of success stories that you are looking for, because those people, 
and I will close by saying this, those people don't deal in — I love 
the terminology — deliverables. 

Well, we did an analysis of the impact of the marketing proposal 
after we did the marketing proposal analysis. That wouldn't make 
it with a board of directors if you are a local developer. They want 
to know how many jobs, how much capital investment, how much 
tax base was created. 

So I think this concept of funding professionalism, like I say, a 
community can get a consultant, all kinds of consultants; but it is 
very difficult to get Federal money to hire a developer. And I think 
there is an emphasis that ought to be placed there. 
You can tell I feel strongly about this. 

Mr. Wise. Mr. Lee, I agree with your remarks, there is a dan- 
gerous precedent you are establishing because the other thing they 
can do, if they bump their heads, is decide to become a Member of 
Congress. 

I have one more question before I relinquish my turn on this 
round. Does either one of you have some suggestions for areas the 
EDA could be involved in that it is presently not involved in, that 
is, as this committee considers reauthorization, if it should look at 
moving EDA in those directions? 

Mr. Reese. From my own perspective, in dealing with not only 
EDA programs but with the Small Business Administration 
through my office and with a variety of State economic develop- 
ment programs, I would like to see EDA stay pretty much where 
they are. 

I think funding the public infrastructure is an area that we need 
an awful lot of help in. In my region, and in most regions in New 
York State — I am sure most areas of the northeast— if infi-astruc- 
ture were in place, chances are now it is outdated, needs to be re- 
placed or improved. 



15 

There are other agencies that are providing financial-tjrpe pro- 
grams that assist businesses directly, which EDA had done in the 
past with direct loans and loan guarantees. 

In my opinion, I would rather see them concentrate more on the 
pubhc infrastructure for industrial development. 

Mr. Lee. I would like to suggest an enhancement of some exist- 
ing things and a consolidation. I think there needs to be a crisis- 
control mode or a fast-track system or an alarm bell. But, basically, 
what I am saying is if someone contacts EDA and says we have a 
project that is going to create 500 jobs, if you are in the private 
sector that project is going to get more attention than a feasibility 
study; and it is going to get through the system faster. 

If it is going to create a thousand jobs, it is going to get even 
more attention and go through quicker. And I think — and what 
happens is the technicalities are exponential with the size of the 
project and the impact. It gets more difficult to go through. 

So I would suggest an enhancement to the existing program 
whereby there is a mechanism within the structure that if there is 
immediate job creation, the resources — we don't do it business as 
usual; we ring that bell. If the project stands muster and it is a 
good project, the agency makes it its job to expedite and get it 
done. 

I gave the scenario about the client wanted to make a deal and 
it takes a year before you can come to the table with anything 
meaningful. I have never had an insurance — you know, we court 
these people for six, eight months, trying to convince them to locate 
a plant. 

I have never had an insurance salesman say to me, would you 
like to see my policy? And I say yes, I would like to buy that, and 
have them get up and say, okay, I will come back in a year and 
have you sign the paper and get a check. I don't think they will 
be in the insurance business very long. 

I can't deal with a client and say, I will see you in a year. 

Mr. Wise. Thank you. 

I will turn to the Ranking Member, Ms. Molinari. 

Ms. Molinari. Thank you very much. 

Mr. Reese, I guess we should add that the reason Mr. Boehlert 
isn't here is because he is meeting with some members of the Base 
Closure Commission, which may, in the long-term, make your job 
a little bit easier. So I am sure you can forgive him for his absence. 

I want to thank both of you for giving us your hands-on exper- 
tise. 

Mr. Lee, if I could just follow up, your last remark seems to 
imply that, if we, in fact, move more into the performance end of 
measurement, what is going to happen is that your role becomes 
a little more aggressive in terms of oversight. We are going to be 
doing less review up front and more review during the course of a 
project. 

Is that a correct assumption? 

Mr. Lee. I believe so. 

Ms. Molinari. And are we prepared to do that? 

Mr. Lee. No. But we need to be. 



16 

Ms. MOLINARI. But as we reauthorize then, what you are sug- 
gesting is to shift the resources from the front end to while the 
project is going on? 

Mr. Lee. I am suggesting I think that it is not something that 
can be changed overnight because this whole system of hiring a 
consultant, going to the university center, finding out, you know, 
what meshes, it has been in place for so long; and I think Con- 
gressman Wise's comment was exactly accurate about, you know, 
form and function and which goes first or second. 

I think I couldn't honestly say we can change that overnight. But 
I think where we can change it is to make some set-asides and 
some accommodations so that when people have real substantive, 
meaningful projects, we go — instead of to business as usual, we go 
to Plan B within the Agency. And, quickly, as those projects go 
through and are successful, people will realize, hey, this works. 
And then that restructuring will take place on its own. 

Ms. MOLINARI. Naturally, yes. 

I think your point is well taken when you talk about the kind 
of volatile economic environment that we are all existing in, and 
will probably for our future. Do you have any indication how many 
missions we have lost because of, the approximately nine-month re- 
view process? 

Mr. Lee. Oh, it is longer. It is nine months to get clearance. But 
then we go to nonprogrammatic problems. 

For example, we are going to build — I am going to extend a road 
to something in an industrial park. Thirty days to advertise for 
this, this sign off, that sign off, the non-EDA requirements, you 
know. And then most of these things — you are packaging EDA 
with, say, ARC or a State program. 

By the time you get through all the paperwork requirements, it 
is well over a year. And as I said, the result is — I think if you real- 
ly audit carefully and get beyond that, how many in three years 
to how many in day one, you are going to find that the majority 
of the money is going to projects with the potential to create jobs, 
rather than projects that create jobs immediately. 

Ms. MOLINARI. I would also think there are those projects that 
are simply abandoned because people can't wait. The need may di- 
minish or the incentive diminishes over the year and a half that 
it may take before there is actually a shovel in the ground. 

Mr. Lee. I can't give you a number, but I would say probably the 
majority of the projects would fall into that category. They just look 
at it and say, this won't work. 

Ms. MOLINARI. I can't keep it together that long. Is that your re- 
sponse, Mr. Reese? 

Mr. Reese. Yes, that is pretty universal. We have a company to 
look at in particular communities in my region. They have their 
checklist for location decisions. And if they need particular water 
pressure that is not available, if they need sewer services that are 
not available, you are just taken off the list immediately. We may 
be taken off the list before we even realize there is a client looking 
at our area. It happens that quickly. 

And what we are trying to do is have that infrastructure in place 
so when a deal comes along we can respond to it. 



17 

Ms. MOLINARL The other question I have, Mr. Reese, in your tes- 
timony, you seem to imply that you have been able to work with 
the revolving loan fiind very well. 

Mr. Lee, in your written testimony you stated that there are 
sometimes problems in coming up with the 25 percent matching 
fund. 

Can you comment on that a little bit more? 

Mr. Lee. It comes from a specific situation. We decided to go 
with a "Field Of Dreams" concept two years ago, do a, "If we build 
it, they will come," and we created a research institute. And we 
have, I am proud to say. General Djniamics, Olin Ordnance, the 
Army, the Navy, the Army Research Lab, a number of fine quality 
institutions. And we are looking at a consortium of universities. 
University of Louisville, North Carolina State, Marshall Univer- 
sity. 

What happens under the defense conversion programs is they re- 
quire doUar-for-doUar matching money. The only existing players 
that can get in that arena, that can afford the ticket to that dance, 
are well endowed existing, traditional research based high tech 
foundations. 

And so there wasn't any new ones created with those dollars. 
And I think there is a whole lot of talent out there, a whole lot of 
jobs that could be created. We have a proposal right now to take 
an existing piece of military equipment that is used for nuclear, bi- 
ological, and chemical sense in the field; and we know, there is no 
technology breakthroughs that that can be converted to be used for 
rapid response environmental use. And we have got a proposal to 
do that. 

We have got the top scientific minds in this country. And the 
manufacturer of the vehicle, and it is something that is currently 
being manufactured, by the way, in Germany. Then we could bring 
it to the U.S. 

The problem that I am having is I have got to have doUar-for- 
doUar matching money. And I would love to be able to go to a Fed- 
eral agency and say, this makes sense, look at the merits; and if 
you think the merit is there, help me with that match. Because 
only the well-endowed, existing organizations can play in that 
game. I am locked out. 

Ms. MOLINARI. Okay. So you would suggest that we provide some 
mechanism for an appeal process for situations like that? 

Mr. Lee. Again, yes. Base it on the merits. 

Ms. MOLINARI. Thank you, Mr. Chairman. 

Mr. Wise. Turn to the gentleman from Arizona, Mr. Copper- 
smith. 

Mr. Coppersmith. No questions, Mr. Chairman. 

Thank you. 

Mr. Wise. Turn to the gentleman from California, Mr. Hamburg. 

Mr. Hamburg. No questions, Mr. Chairman. 

Mr. Wise. I would like to express a concern I have. I am not 
going to ask you all to answer unless you choose to, for obvious rea- 
sons. 

My concern, this is not ARC- or EDA-based only, it includes a lot 
of Federal agencies, but EDA seems to me to be on the cutting 
edge, that it is out there first. As Mr. Lee notes it is often the one 



18 

that you don't have to go through an additional layer of bureauc- 
racy to get to. 

It also has a specific charge — it is a single agency charged with 
creating jobs, as opposed to an SBA, a HUD, a Farmers Home, or 
RDA, which all have numerous functions. 

So EDA, it seems to me, can be more of a laser in economic de- 
velopment than many agencies. I am concerned about some pro- 
grams under EDA. Let me just state that it is my intention to per- 
sonally visit some of these programs, hopefully in different parts of 
the country, see how the fi-equent flier points in the office have 
built up so that I can gain a better understanding. 

But it is my concern that in the area of economic development 
we have got people that have great credentials but no experience. 
I get concerned with university center activities on the surface be- 
cause for instance, in some of the small business programs, I see 
people with degrees but nobody who has run a small business. I see 
people that are charged with doing economic development and de- 
mographic studies that turn out boilerplate and then turn aroimd 
and charge the local community for something that probably would 
have been readily available for a much cheaper fee, not that the 
university or those consultants are making a lot from it, but it still 
costs the local community a great deal of money. 

So that is why I am getting to be a real bug on accoimtability 
and measuring results. And so it does seem important that those 
that are charged with economic development, whether it is the 
EDA, or contractors to EDA, actually have some experience and be 
held to a standard, and that we are not just simply generating 
paper. 

I had a State based agency — which was not EDA, I might add, 
send me their latest annual report the other day about all that 
they had accomplished during the past year. There had been con- 
ferences and there had been consultants hired, there had been con- 
tracts let; and we have counseled and dealt with so many different 
individuals under these circumstances, broke them down into cat- 
egories, that thick. 

If that is the case, why ain't we rich? Where are the results? 
There is a service industry that has developed quite well on con- 
ferences. I used to hold a bunch of them myself. The only trouble 
is when — it is great sending out patron mailings. The only trouble 
is, if you don't have any follow-up, it is not fair and all you are 
doing is raising hopes unnecessarily. 

And so what you have heard is an ad hominem, really ad nau- 
seam, beginnings of a diatribe which I will curtail at this point. 
But that does, I think, reflect some of my concern. 

I would ask you to respond to that at your peril, if you choose. 
But please don't feel obligated to because you have got to work in 
the real world as well. 

Mr. Lee. Well, Congressman, my only 

Mr. Wise. Frank — I like him, he never hesitates. 

Mr. Lee. No, sir. My only experience with this type of format has 
been what I see on CNN, and all the people sitting in this chair 
on CNN don't look real happy. 

So I checked before I came up here today, and I can assure you 
that my organization has no pending applications before EDA for 



19 

anything. So if any of you folks worry about conflict of interest, you 
taUc to this guy. He has got the $11 milHon. 

Your concern is justified. You are correct. And it is a problem 
that people in government don't like to deal with. It is hard to doc- 
ument what is an economic developer, what is a viable program. 
It is hard to define that. It is kind of floating out there. 

But, you know, you know it when you see it. And the only coals 
that I can carry to New Castle on that deal are, you got an audit 
process, it is required, every dollar you send out, you are going to 
get an audit, independent audit. Stick something in the audit list, 
document — if you are going to document everything from smoke- 
fi'ee workplace to whatever else, okay; all these other things have 
to be attached. It is not a big deal. Document how-what tax base 
was created. You know. What is the return on the investment? 
How much tax dollar was created by the private sector investment 
leveraged off these Federal dollars? 

Or was the whole thing masked in a tax break deal to where the 
point of return is somewhere down the road when the plant life is 
diminished? You need to know that. 

What is the actual return on investment in terms of tax base cre- 
ated? How are the jobs created? What are the wage levels for those 
jobs? What are the benefits? What do the workers get for their 
labor? 

And I think you can put that in the audit process. And while you 
may not change the world, you will sure catch some people's atten- 
tion, because they are going to move out of what might be — ^what 
could be a tomorrow land. And they are going to start dealing with 
what we did last month. 

Mr. Wise. Mr. Reese, any comments? 

Mr. Reese. Just a short comment. I would say the way you de- 
scribed the university system has been our relationship with our 
Plattsburgh University System for the past four or five years. 

When I worked for the university center back in the late 1970s, 
we were very project specific, worlang almost as business consult- 
ants with small business people, putting together their application 
for agencies like SBA or Farmers Home or some of the State pro- 
grams, most times through the district offices, the three district of- 
fices that we serve. 

Changes occurred in our area with the small business develop- 
ment centers funded through the SBA being more plentiful and 
being set up really to handle that job. And we have a very good 
relationship with our local SBDC. And they do a very fine job of 
providing that business counseling. That has allowed our luiiver- 
sity center, I think, to get more involved with Canadian Free Trade 
because they are located in Plattsburgh next to the Canadian bor- 
der, some export-type programs which are important but don't real- 
ly provide the hands-on service that we need at the district level. 

In my five-county district, we have four employees in my office, 
two professional staff and two clerical staff". That spreads us pretty 
thin, and we could use some help, technical services type help be- 
hind us. 

But the way it is presently set up and operated with their staff 
at the University of Plattsburgh, we are not getting that type of 
help. 



20 

Mr. Wise. Ms. Molinari? 

Well, I appreciate very much — and I would also ask that you 
keep in contact with the subcommittee. If you have additional 
thoughts, would you please submit them in writing. We would be 
delighted to have them. And I greatly appreciate the time that both 
have taken to be here. 

I now call the next panel, which will be Craig Smith, Acting As- 
sistant Secretary, Economic Development Administration, from 
Washington. 

I also have Hsted Secretary Smith; Stephen Brennen, Director of 
the Denver Regional Office of the EDA; and John Corrigan, good 
friend from Philadelphia, Philadelphia Regional Office with the 
EDA, and anyone else that you care to bring up. 

Let me make an opening remark before you get started, which 
is I hope you understand that I am a big fan of EDA and that — 
so I consider this as bringing the family together to see how we can 
be even more effective. And I just want to make sure that EDA has 
all the opportunity to start to shine like I think that it can. 

So that is the spirit in which I undertake these proceedings and 
make my remarks. 

Mr. Smith, is there anyone else you want to bring forward? 

TESTIMONY OF CRAIG SMITH, ACTING ASSISTANT SEC- 
RETARY, ECONOMIC DEVELOPMENT ADMINISTRATION, AC- 
COMPANIED BY JOE LEVINE, CHIEF COUNSEL, STEVEN R. 
BRENNAN, DIRECTOR, VINCE GOODMAN, BUDGET OFFICER; 
DENVER REGIONAL OFFICE, EDA; JOHN E. CORRIGAN, DI- 
RECTOR, PHILADELPHIA, REGIONAL OFFICE, EDA; EDWARD 
LEVINE, CONGRESSIONAL AND PUBLIC AFFAIRS DIRECTOR, 
EDA; DAVE WITSCHI, TITLE IX ECONOMIC ADJUSTMENT DI- 
RECTOR; DAVE McILWAIN, DEPUTY SECRETARY OF OPER- 
ATIONS, EDA; AND LEON DOUGLAS, ACTING DEPUTY ASSIST- 
ANT SECRETARY FOR PROGRAM SUPPORT, EDA 
Mr. Smith. The gentleman I have with me today is Mr. Joe Le- 
vine our Chief Counsel; Mr. Brennan, who is the Regional Director 
in Denver; Mr. Corrigan who is the Regional Director in Philadel- 
phia. 

I also have Mr. Vince Goodman, who is our Budget Officer. 1 
have Mr. Edward Levine, who is our congressional and public af- 
fairs Director. And I have Mr. Dave Witschi, who is our Title IX 
Economic Adjustment Director. And Dave Mcllwain, who is our 
Deputy Secretary of Operations; and Mr. Leon Douglas, who is the 
Acting Deputy Assistant Secretary for Program Support. 
Mr. Wise. Thank you. Please proceed. 

Mr. Smith. I have a shorter version of my statement, and I 
would like to read it to you. 

Mr. Chairman and Members of the subcommittee, thank you for 
providing me with the opportunity to appear before you today to 
discuss the reauthorization of the Pubhc Works and Economic De- 
velopment Act of 1965. 

We are pleased and excited that for the first time in 12 years the 
President will join with Congress to support the programs of the 
Economic Development Administration. 



21 

We believe we are entering a new era of productive cooperation 
between the legislature and economic branches to address the Na- 
tion's economic development needs. 

In furtherance of that cooperative spirit, I would like to address 
the issues you raised in your invitation to me to testify today. We 
have already submitted detailed exhibits regarding these matters 
and will be happy to answer any questions you may have at the 
end of the prepared statements. 

In fiscal year 1993 project funding is moving at a significantly 
faster rate than fiscal year 1992. For example, through the end of 
April of this year, a total of $91.7 million had been obligated for 
100 public works grant awards. 

During the same period in fiscal year 1992, EDA had obligated 
only $52 million for 77 public works projects. 

Stated another way, fiscal year 1993, EDA obligated 59 percent 
of its public works ftmding during this period, while it had obli- 
gated only 33 percent at the same point in fiscal year 1992. 

EDA is presently involved in a significant way with defense con- 
version activity, both with base closings and defense cutbacks. Of 
the $130 million transferred fi*om the Department of Defense, the 
first installment of $50 million was received in February, 1992. 
And the second installment of $80 million was received in March 
of 1993. 

To date, EDA has invited approximately $70 million in projects 
which 19 grants for $24.4 million have been awarded, 23 applica- 
tions for $38.4 million are being processed, and an additional 13 
projects for $7.4 million have been invited. 

EDA's defense conversion role is essentially to implement critical 
elements of base reuse plans for community adjustment strategies. 
In most cases, the plans and strategy are developed with the as- 
sistance of DOD's Office of Economic Adjustment with whom we co- 
ordinate our investment decision. 

We expect the demand for defense conversion assistance to accel- 
erate as more communities complete their economic adjustment 
strategies or base reuse plans. It may, however, be several years 
before environmental and other base transfer issues are resolved 
and EDA assistance can be used by some of the affected commu- 
nities. 

It is also becoming apparent that the infrastructure investments 
critical to communitj^s ability to reuse a base are generally far 
more costly than EDA is accustomed to funding. 

EDA has also been very active in assisting with the economic re- 
covery of areas damaged last fall by Hurricane Andrew and Hurri- 
cane Iniki and Typhoon Omar. Of the $70 million appropriated for 
this purpose, 19 grants for $19.4 million have been awarded, an ad- 
ditional 17 applications for $26.6 million are being processed, and 
nine project applications for $19.8 million have been invited. 

Approximately 75 percent of the $70 million has been targeted 
to address damage caused by Hurricane Andrew in Florida. EDA 
established a temporary Miami field office, and the staff has 
worked closely with the impacted communities to review more than 
$130 million in proposals. This successful operation is winding 
down as project development efforts are substantially completed 
and the office will be closed at the end of June. 



22 

EDA moved rapidly to alleviate the damage caused by the civil 
disturbance in Los Angeles last year. Through its Title IX special 
assistance economic development and adjustment assistance pro- 
gram, a $3 million grant was awarded to "Rebuild L.A." to develop 
a strategy to assist businesses located in the affected area and a 
$1.5 million grant was made to the Los Angeles Convention and 
Visitors Bureau to help restore the tourism industry and related 
employment. 

Over 85 percent of the Los Angeles tourism industry work force 
is minority, many of whom live in the riot affected areas. 

The California recovery effort is another policy initiative in 
which EDA is involved. The President recently asked Commerce 
Secretary Ron Brown to be the lead cabinet officer for this effort 
and to craft a coordinated Federal local response in stimulating the 
California economy. 

Teams of EDA specialists have begun holding meetings through- 
out the State to assist economically distressed areas establish or 
reestablish their employment base and to aid in the defense conver- 
sion efforts in the area. EDA expects to participate in the Califor- 
nia recovery effort through its defense adjustment and regular pro- 
grams. 

Regarding economic distress in urban areas in general, EDA con- 
tinues to be committed to meeting the needs of distressed urban 
communities. The fiscal year 1993 notes of funds availability recog- 
nizes this commitment by stating that EDA is particularly inter- 
ested in projects located in authorized and designated enterprise 
zones. 

Historically, EDA has invested approximately 25 percent of its 
resources in urban areas. In addition to the quality action team ef- 
forts I will address next, EDA has undertaken two major TQM ini- 
tiatives. 

The first of these, the Excentralization Steering Committee, was 
established to streamline the grant application process. This effort 
had two main thrusts, the elimination of unnecessary or duplica- 
tive steps, and the redesign of grant application forms to make 
them more user-friendly and limit the information requested to 
that which is necessary for project review and approval. 

As a result of this effort, the public works application process has 
been approved, and draft application forms have been developed. 
Implementation of these new forms, however, will not go forward 
until the second EDA initiative, the process reengineering commit- 
tee, finishes its work. 

This committee is concentrating on ways to reduce the average 
time required to process a public works grant. Our goal is to have 
the average processing time reduced to four months. This effort 
may well require further paperwork modification, so we will not 
forward the final application form to 0MB until the committee's 
work is complete. 

The new process is expected to be ready for a pilot test to begin 
this August with final recommendations completed by the end of 
the year. 

The program review and improvement activities represented by 
the quality action teams are already paying dividends for EDA's 



23 

clients. The economic development district quality action team is- 
sued its final report in December, 1992. 

The university center quality action team was established in 
January, 1991 to develop recommendations for improving the oper- 
ations and administration of the university center program. The 
final report was issued in September, 1992. 

The revolving loan fund quality action team issued its final re- 
port in June, 1991. These efforts are already improving the deliv- 
ery of our assistance programs and will lead to further improve- 
ments in the months ahead. 

The public works program evaluation was undertaken by an out- 
side consulting firm and was completed in March of 1992. The 
major findings of this study were that public works projects were 
meeting their objectives of helping distressed communities and that 
grantee institutional capacity is often the most important factor in 
project success. This report is currently under review in the agency 
for implementation of those recommendations that would strength- 
en the public works program. 

The unobligated balance of the start of the fiscal year 1993 was 
$134.6 million. It is estimated that by the end of the fiscal year, 
the unobligated balance will be $137.6 million. 

It is quite possible that environmental clean-up costs associated 
with sites for which EDA is responsible will seriously deplete the 
revolving fund. 

Included in the materials submitted is a list of the current 
EDR's, the areas they serve, and their addresses. 

In response to your other request regarding EDA directives and 
operations handbook, we have submitted a set of the current EDA 
directives. EDA does not have an operations handbook, rather it 
operates on the basis of established directives, regulations, and pol- 
icy memorandum. 

I would now turn to Mr. Brennen and Mr. Corrigan to answer 
the questions that you asked of them. 

Mr. Wise. Thank you. 

Mr. Brennen? 

Mr. Brennen. Good morning and thank you, Mr. Chairman. 

I understand my statement will be included in the record, so I 
will just summarize it. 

If there is a truism in economic development — and there may be 
none — it is that the only substantial and long-term successes come 
from strategies conceived at the local level. This can only occur if 
there is strong community leadership and broad civic support. 

The key word here is "local." Meeting an economic development 
opportimity or solving an economic development problem can only 
occur through the means of a locally devised strategy. One can 
then ask what role EDA should play in such a fundamentally com- 
munity based process. 

I would argue that EDA's programs operate in a manner that not 
only supports local economic development but catalyzes and nur- 
tures it in areas where such help is crucial. The first is by provid- 
ing a planning infi-astructure, funding economic development dis- 
tricts, tribal organizations, and State and local planning fiinctions. 

In this way, EDA helps people through their local and regional 
organizations to think about and plan their economic future. This 



24 

helps them to grow their economy at the pace and direction they 
wish and prepares them for the difficulties of any local economic 
downturn. 

Communities then come to EDA with their priorities and their 
prescriptions for economic development. EDA assists them through 
an array of potential tools including business finance, public works 
construction, and technical assistance. 

Yet the idea — the project, if you will, is conceived and controlled 
by the community. In the most positive way, EDA is reacting to the 
community needs as they see it and not formulating a prescription 
for them. EDA is not a traditional categorical grant program that 
presumes the wisdom of the Federal Government. 

I will now discuss some of the points raised in the invitation 
here, and Mr. Corrigan, my colleague from Philadelphia, will be ad- 
dressing the remainder. 

The economic development districts. The value of the economic 
development districts is something to which I believe I can speak 
somewhat authoritatively, given my experience in EDA's Denver 
region. There are 50 EDDs in this region. These EDDs provide the 
backbone of both EDA's programs and overall successful economic 
development. 

In highly rural areas, the multi-county districts are essential in 
bringing needed economic development expertise to bear. There 
just is not the critical mass of resources in these sparsely populated 
areas to support the staff and attention needed for good economic 
development. Without EDA's funding support, I doubt whether a 
good number of these organizations would exist. They certainly 
could not provide the services they do now, and some regions would 
subsequently suffer. 

The direct loan and loan guarantee program. EDA has not pro- 
vided any direct loan assistance since 1982. The loan guarantee 
program was discontinued last year. As you are aware, EDA's expe- 
rience with this program was mixed at best. Part of the problem 
could be attributed to the fact that EDA was required to be a, 
quote, lender of last resort, unquote. 

EDA's loan and loan guarantee programs required findings that 
credit was not available to a firm from someone other than EDA. 
Yet, we had to make a finding of a reasonable assurance of repay- 
ment. This seeming contradiction greatly narrowed the universe of 
potential borrowers. 

It should be noted that Title IX revolving loan fiind program may 
meet a need in this area. In the Denver region, EDA has capital- 
ized over 42 revolving loan funds for $24 million. 

Economic adjustment. The program authorized by the special 
economic adjustment assistance provisions of Title IX of our act are 
growing in both funding and importance. 

The real needs for special adjustment assistance and EDA's abil- 
ity to respond aggressively and flexibly in such situations is crucial. 
EDA's ability to assist quickly imder Title IX programs is pointed 
out clearly in the agency's involvement in the earlier mentioned 
aftermath of the Los Angeles riots. EDA was able to have grants 
ready that were responsive to what local leaders needed within 
three weeks of the riots. 



25 

This was a priority of local governments, and EDA was the one 
Federal agency that could do so in a timely manner. This instance 
points up the value of Title IX's flexibility. This also is a good ex- 
ample of how EDA supports and not directs local economic develop- 
ment efforts. 

Now I will defer to Mr. Corrigan and would be happy to answer 
any questions. 

Mr. Coppersmith [presiding]. Thank you. Please begin, Mr. 
Corrigan. 

Mr. Corrigan. Mr. Chairman, and Members of the subcommit- 
tee, I also will summarize the written remarks that I have submit- 
ted. 

Thank you for inviting me to discuss my experience with the Eco- 
nomic Development Administration. As an EDA employee, I appre- 
ciate our agency being, in Secretary Brown's words, "... a critical 
element in the administration's program to create jobs." 

I would also like to be associated with the comments of my col- 
league and fellow Regional Director, Steve Brennen, on the impor- 
tance to EDA of local strategies and community-driven programs 
and projects. 

We are proud of EDA's iinique system of assisting local economic 
development initiatives. And we look forward to making EDA's as- 
sistance delivery system even better. 

Let me now address the remaining points raised in the Sub- 
committee Chairman's letter of invitation. They were the subjects 
of public works grant processing, decentralization of approval au- 
thority, and eligibility of areas for EDA assistance. 

With regard to the Financial Assistance Review Board, which 
has been in existence for approximately 12 years, it is the Depart- 
ment of Commerce mechanism for coordinating grant assistance 
among the different agencies in commerce, assuring consistency in 
the process and determining whether an applicant has an out- 
standing unresolved debt to a Departmental agency. The FARB re- 
view is done concurrently with the EDA Washington project review. 

With regard to public works loans, they were approved in EDA 
from 1966 to 1978. Interest rates were at one-half percent below 
the Treasury rates, and maturities ranged up to 40 years. These 
loans were used both to supplement EDA public works grants and 
as a stand alone program. This program was successftil in fiinding 
needed projects; and, due to a low default rate, EDA is recouping 
its funds with interest. 

One of the main purposes of the program was to provide poor 
communities with the required local match for our grants. 

With regard to the decentralization of approval authority, from 
the late 1970s to 1981, EDA regional directors were delegated 
grant approval authority for public works projects up to $750,000, 
and loan approval authority up to $1 million for business loans, as 
well as certain other pre- and post-grant approval authorities. This 
authority was rescinded in 1981 at a time when the then-new-ad- 
ministration indicated that EDA's programs would not be contin- 
ued. 

With regard to eligible and authorized areas, current eligibihty 
criteria for program funding gives priority to areas suffering from 



26 

substantial and persistent unemployment above the national aver- 
age for a 24-month period. 

Of the many arguments against continuing support for EDA, per- 
haps the most often heard is that 80 percent of the country is eligi- 
ble for EDA grants. Of course, 80 percent of the coimtry does not 
receive funding from EDA each year. And, in fact, the great major- 
ity of EDA assistance goes to areas that have very high distress 
and unemployment. 

The economic development representatives and the regional of- 
fice often discourage projects from areas that are not distressed. 

Provision for temporary eligibility may be one way to eliminate 
the criticism that 80 percent of the country eligible. Rather than 
designating an area on a formal is basis, the Agency could certify 
eligibility according to current statistics prior to accepting an appli- 
cation for title I public works assistance. 

I will now be pleased to answer any questions that the Members 
may have. 

Mr. Wise [presiding] . Thank you very much. 

Anyone else care to comment? 

Mr. Corrigan, you brought up, as you stated, one of the areas 
where EDA is criticized. I know that the gentleman from Penn- 
sylvania, Mr. dinger, and I believe Mr. Oberstar, worked on this 
problem a good deal in terms of a solution. 

It sounds similar to what you are suggesting, which is that you 
look at eligibility based upon unemployment in an area as opposed 
to formally designating an area eligible to be considered. 

I, obviously, have a number of questions. You heard the gist of 
some of my interests and concerns. 

Secretary Smith, you talked about the review process in your 
written statement as well, indicated that there had been some ac- 
tivity through a TQM initiative, and you thought that the appUca- 
tion process — you were working, at least I believe, to get it down 
to four months. 

Is that a correct statement? 

Mr. Smith. Yes, sir. 

Mr. Wise. And you heard the testimony from Mr. Lee that they 
wanted to try to get it down to 60 days. 

Mr. Smith. Sometimes applicants feel that is too long. 

Mr. Wise. Sir? 

Mr. Smith. And sometimes appUcants fee that 60 days is too 
long. 

Mr. Wise. Do you think that is a possibility? 

Mr. Smith. Yes, sir, it is a possibility to reduce the time to four 
months. 

As I said, we have been working very diligently on that. We have 
come up with two new application forms. 

Just last week in Denver, a committee was working on a new ap- 
plication process to cut that time down. We think it can be cut 
down. 

It is difficult when you do deal with some of the laws and the 
environmental acts; the clean air, clean water type of things that 
we do have to deal with. But I feel that we can significantly reduce 
that timeframe. 



27 

Mr. Wise. In your TQM process, did you involve those from out- 
side the Agency such as the — Mr. Lee's and Mr. Reese's? 

Mr. Smith. Yes, we certainly did. 

There were district people. There were applicants who worked 
with the EDA. There were a number of groups that worked with 
the TQM group, the so called excentralization group and the group 
working to reduce the timeframe. Yes, sir. 

Mr. Wise. And when do you expect that that process — expedited 
process and new application forms will be used? 

Mr. Smith. We are shooting for a pilot project in two or three 
months, to finish in August or September, when we finally come up 
with the final results. 

Mr. Wise. Mr. Corrigan, I have got a suggestion for one of those 
offices. 

Mr. Corrigan. I can imagine, Mr. Chairman. 

Mr. Wise. Ms. Molinari might also or some others might want 
to talk to you about that. 

You have heard my concerns about measuring results, and I no- 
tice you referred to the quality assurance teams. Could you address 
the criteria that either are being used or perhaps the Agency might 
be willing to look at? 

I mean how can we truly determine that something is operating 
effectively versus something is not? 

Mr. Smith. Well, the public works project evaluation — and I 
might ask Mr. Mcllwain to comment on this — started in 1977 and 
were reviewed two or three other times since. 

And they have found that the time frames to measure pubhc 
works projects is long maybe 10, 15, 20 years, to tell how effective 
they are. 

I remember, personally, industrial parks that filled up over 10, 
15 years. It is an ongoing process. It takes a considerable time to 
see the full fi^its of the investment. 

Mr. Wise. If you would identify yourself for the record. 

Mr. Smith. May I introduce Mr. Mcllwain, who is the Deputy As- 
sistant for Program Operation. 

Mr. MclLWAlN. Chairman Wise, the only thing I would like to 
add is, as Mr. Smith has indicated, the development process is a 
long-term process. I think sometimes we focus too much attention 
on the near term job creation aspects. 

I think one of the roles, and the primary role of EDA, is to assist 
distressed communities to prepare themselves for economic devel- 
opment. We cannot respond in certain instances quickly enough to 
address the needs of a business that is interested in locating in a 
community next month or possibly, even within the next three or 
four months. 

The reason for that is because we are involved in infrastructure 
development. And as the gentleman — Mr. Reese, testified earlier, 
after the grant is awarded, there are still the necessary bidding 
and contract award and construction activities that are required. 
And the procedures for these activities are required by, for the 
most part, local and State laws. They are not EDA requirements 
necessarily. 

Because it is a long-term process, it is important for EDA to be 
able to respond quickly, as we can with some of our programs. But 



28 

in terms of public works and development facilities, it is important 
to note that it is a long-term process. Industrial parks don't fill up 
overnight. It takes time. 

I think our evaluation, the evaluation that was furnished as part 
of the record to the committee, will indicate that when projects are 
looked at on a longitudinal basis, there is the impact for the com- 
munity in terms of job creation. I just hope we don't focus too much 
on the near term job creation aspects of the project. It is an impor- 
tant criteria for selecting projects, but it shouldn't be, I hope it is 
not the only criteria that the committee believe we would use. 

Mr. Wise. Fair enough. But I can think of two projects in my im- 
mediate memory where what we were talking about was not an in- 
dustrial park but the ability to tell a company that was bringing 
several hiuidred jobs that there would be a water line constructed 
which everyone had signed off on, the county commission, right on 
down the line, that there would be a water line there. 

And that is something that it would seem to me that would re- 
quire quick response and the ability to get that done, to review it, 
if it is appropriate, to announce it, and so that they could then 
make that commitment. 

Mr. McIlwain. Yes, that is very correct. I think the fact that 
they know that the commitment is made to the community and 
that the funding will be forthcoming based upon the submission 
and review of an application, which is the process that we are try- 
ing to improve and have made some relatively minor improvements 
over the last couple years. 

But it is a process that we hope we can improve; right now it is 
a longitudinal process, it is sequential. What we are trjdng to do 
is make it more circular, getting a commitment from the agency 
earlier on so that people know that our funding assistance will be 
forthcoming. 

And I think that is what a business person wants to know, that 
if he or she is going to commit to a community, and that commu- 
nity is working with EDA, the community is going to be able to 
maJce a correspondng commitment. 

Mr. Wise. I have two questions before I turn it loose. 

One of the concerns I have had expressed to me several times, 
actually out in the field, as I have held my meetings and met with 
developers and others is that within the regional offices there is 
some sort of conflict or total separation between the regional IG 
and/or the legal counsel — I apologize — the legal counsel and the re- 
gional staff. And that as I have been told on more than one occa- 
sion accounts for some delay. 

Would anyone care to comment on that? Perhaps since the legal 
counsel is here, he might wish to comment on it. 

Mr. Levine. I think that is more perception than reality. 

Mr. Wise. What about — the concern has been expressed to me 
that the regional office, while they may be signing off on a project, 
that it all eventually has to go to Washington for the counsel's re- 
view anyhow, which is separate from the regions. 

Is that correct? 

Mr. Levine. That is correct. 

Mr. Wise. Are you aware of this concern that has been ex- 
pressed? 



29 

Mr. Levine. Yes. Basically the review process reflects the level 
of authority regionsl directors have to approve matters. 

To the extent that regional directors have authority to approve 
things, the regional counsels have authority to provide that clear- 
ance. To the extent that things are required to be signed off at 
headquarters, then headquarters review is required. 

Mr. Wise. My observation — which you all don't have to confirm 
one way or the other — but my observation is that EDA, in the past 
15 years at least, has been through several different processes that 
it follows. Sometimes regions have had more authority, other times 
it has all come to the assistant secretary's desk for personal review, 

I am not quite sure where it is right now. Is that — is that process 
\inder review once again? 

Obviously, to those in the field, I believe the feeling is that the 
more autonomy that the region has, the quicker things get done. 

Mr. Smith. I would like to say that, yes, the entire process is 
under review. 

Mr. Wise. Do either of the regional directors care to make a com- 
ment? 

Mr. Brennen. I will agree. If you leave it with us, it will be done 
quicker. 

Seriously, in any process, when you cut out a step, you, by defini- 
tion, reduce time. 

The question you have to ask yourself is, is that step necessary 
to achieve some programmatic end or to ensure some level of safety 
in terms of the project not being too risky. It is a continuum. It is 
a decision you have to make. It does exist right now, a duplicate 
review process, the region and headquarters. And the issue is 
whether or not that is necessary to ensure program safety. 

Mr. Wise. Is that duplicate review process also occurring at the 
counsel level? 

Mr. Brennen, It does not just occur at the counsel level. There 
is a programmatic review at headquarters also, a short, abbre- 
viated program review. But the duplicate review does not just occur 
at the counsel level. 

Mr. Wise. No. No. I was not singling out the counsel. If you have 
a division between programmatic and counsel, both of them are 
going through this regional and then up to Washington. 

Mr. Brennen. They are not sequential. So it adds time to the 
process. 

Mr. Wise, Mr. Levine, in the TQM process and the ability— and 
the working together to try and iron out and shorten the applica- 
tion process, are you involved in this as well? 

Mr. Levine. Absolutely. 

Mr. Wise. That is — Mr. Corrigan, did you wish to add anything? 

Mr. Corrigan, Well, currently the regional directors do have ap- 
proval authority for continuation, university center grants, and 
continuation district grants, for local technical assistance and Title 
DC strategy grants under $25,000, 

Our experience is that in those programs where there is that au- 
thority, the review process is considerably shorter. 

Mr. Wise, Okay, 

And one final question. Oh, I forgot. Two final questions. 



30 

Regional counsels, am I correct that regional counsels are not 
under the supervision of the regional directors? 

Mr. Smith. That is correct. 

Mr. Wise. Is that good? 

Mr, Smith. Well, their day-to-day operation is obviously in the 
regional office. 

Mr. Wise. I am sorry. I couldn't understand. 

Mr. Smith. Their day-to-day operation is in the regional office 
and the flow and that type of thing. 

However, they are reviewed by the chief counsel. Their apprais- 
als are reviewed by the chief counsel and they do have a relation- 
ship with the chief counsel. 

Mr. Wise. In Washington? 

Mr. Smith. Yes. 

Mr. Levine, Let me add, this is something that has changed 
back and forth. The way it is set up now, there are four elements 
in regional counsel's performance plans. I am responsible for evalu- 
ating three of them. The regional director does the fourth. And the 
reviewing official of all the plans is the deputy assistant secretary. 

Mr. Wise. And, finally, Secretary Smith, can you give the sub- 
committee any ideas when the administration may have some leg- 
islative suggestions or a package that it would like to talk with us 
about? 

Mr. Smith. It is my understanding that it is under review, and 
the administration should be presenting it shortly. 

Mr. Wise. Okay. Well, we look forward to working with you. And 
my hope would be — I would like to leave the record open in case 
there is some additional submissions that you wish to make or 
questions that we have. 

It would also be my hope that we could sit down around a table 
and go through some of these things as we move through the legis- 
lation to go through some of these areas that have been raised so 
that we can all make this operate even more effectively. 

And I turn to Ms. Molinari. 

Ms. MOLINAKI. Thank you, Mr. Chairman. 

Going back to the question that keeps coming up time and time 
again relative to the review process. Understanding that a lot of 
the local communities and their bidding process ties up an awful 
lot of time, is there a mechanism — or should there be a mechanism 
as Mr. Lee and Mr. Reese suggested for those projects that might 
need an okay or a quicker review than is normally the procedure? 

Is there an ability to bypass or appeal or make special allow- 
ances in circumstances where agencies have to be forthcoming even 
quicker than your current review procedure allows? 

Mr. McIlwain. Are you asking me, Congresswoman? 

There is a process. I mean EDA has — it depends really on what 
time of the fiscal year we are asked to make that kind of an expe- 
dited or fast-track process. 

We operate on the basis of a pipeline. We authorize the regional 
offices to invite more projects in any given year than they can fund. 
And the reason we do that, it keeps the pipeline open so that when 
October and November of the subsequent fiscal year gets here, we 
can continue a level of funding. Otherwise, it is kind of like start- 
ing and stopping a train; it takes a while. So what we try to do 



31 

is keep that pipeline full of potential activity. And, generally, the 
process — but it is not a — allows for it, that is an expedited decision, 
because the Regional Officers are not processing exactly the way 
they are invited into the pipeline. 

If we do find, and if the regional office finds, a project that they 
need to and can respond to quickly, they can move it ahead of other 
projects. We try not to do that very often because of the fact that 
other applicants have been in line waiting and the fact that we 
have an annual appropriation and we have to obligate the money 
in the year in which it is appropriated. So we have an existing 
process that allows for special circumstances. 

Can we do it? Yes. It is rare that we do it, however. 

Mr. Wise. Would the gentlewoman yield? 

Ms. MOLINARI. Sure. 

Mr. Wise. On that, let's assume that you do have a project that 
people are pressing to get moved ahead. All the other peripheral 
work has been done. In other words, the State signed off on what- 
ever it is supposed to provide. Somebody else has. And other 
projects ahead of it have not gotten that degree of cooperation yet. 
Is that a factor in your decision to move it ahead? 

Mr. McIlwain. Yes. Basically at any given time, we are working 
on several projects. 

A project officer knows if the information is there in the regional 
office, and if they can process it it goes forward. The others will get 
put on the back burner until the information comes in. 

Mr. Wise. So you are looking at incidental situations that are not 
EDA specific? In other words, the fact that Farmers Home has also 
agreed to make a loan for the additional amount or that whatever 
else is necessary to make this project go and you are the final 
piece, are you not just looking at EDA? You are looking at the 
whole package? 

Mr. McIlwain. Absolutely. In fact, the point that you raise is 
very critical in terms of the local share. That is one of the key con- 
siderations that we evaluate when we are looking at funding a 
project, whether or not the local share is what we call committed 
and available. 

It doesn't mean the money has to be in the bsink, but it has to 
be committed and available so the project can move forward shortly 
after approval. 

Mr. Levine. I would just like to add one thing. We are talking 
about average times. It doesn't take every project six months. Some 
move faster, some move more slowly. So to the extent that projects 
are ready earlier, they move forward earlier. 

Ms. MOLINARI. Okay. We appreciate that. 

One of the new charges of EDA is defense conversion. Can you 
give us an update, Mr. Smith, or anyone, relative to how the De- 
partment is performing in the basic coordination amongst agencies 
that has taken place right now? 

Is there something we should be looking at as this becomes a 
larger and larger mandate of EDA? 

Mr. Smith. I would like to call on David Witschi, who is the Di- 
rector of the Title IX Adjustment Program that is handling the de- 
fense conversion. 



32 

Mr. WiTSCHl. Thank you. EDA has coordinated defense conver- 
sion activities with the Office of Economic Adjustment of the De- 
fense Department. We do that both with the base closings and with 
the plant shut down type responses. 

The general process is that once an announcement is made, OEA 
goes into a community, organizes the community leadership and 
the stakeholders. That organized community then fashions an eco- 
nomic recovery or adjustment strategy. In the case of a base, it in- 
volves base reuse. Otherwise it is more of a conventional economic 
conversion strategy for the community. 

EDA then can follow on with implementation projects to award 
grants for just the most critical parts of that strategy, to get it up 
and running. In our experience, the base closure process can take 
a number of years to go through the reuse strategy and the envi- 
ronmental assessment. Contract reduction work has moved much 
more quickly in those communities. 

Ms. MOLINARI. And are you receiving cooperation from the other 
Federal agencies? 

Mr. WiTSCHl. Right. We cooperate locally with OEA, that is both 
in Washington and the field staff level. 

And I tMnk the regional directors would agree, that our regional 
staffs work closely with OEA's field staff and with the other Fed- 
eral agencies. We work most closely with the Department of Labor, 
being advised of what they are doing in trying to coordinate the de- 
velopment of our projects with the retraining skills that they can 
assist with. We also work to some degree with the SBA. 

We are just getting into a cooperative relationship with FAA, be- 
cause of the many airfields that are existing at the facilities. 

Ms. MOLINARI. Okay. Thank you very much. 

Did you want to say something, Mr. Brennen? 

Mr. Brennen. I was just going to say that in base closure situa- 
tions, any project that uses former bases as a centerpiece of devel- 
opment, these are as difficult and complex projects as we have ever 
faced. 

Also, that interagency cooperation extends to EPA, the FAA, 
agencies that are not necessarily involved up front in the planning 
process but because of very unique problems and complex problems 
on the site they have to be involved later on. 

So circumstances are going to drive that interdepartmental co- 
operation even greater. 

Ms. MOLINARI. And does that coordination lie with EDA or OEA? 

Mr. WiTSCHl. Coordination between the agencies is approached 
by both the individual agencies. In other words, we are dealing di- 
rectly with OEA and Labor on Day-to-day activities. At a higher 
level, the National Economic Council has a working group on de- 
fense conversion, to which all of these agencies we have been talk- 
ing about are members, including Commerce and EDA. 

And we have been meeting fairly regularly trying to identify bar- 
riers to coordinating and delivering the services and then trying to 
figure out what the best strategies are to eliminate those barriers 
or work around them so we can deliver the assistance of all the 
programs more effectively and in more coordinated manner. 

Ms. MOLINARI. So this is something that is still really being 
worked out? 



33 

Mr. WiTSCHl. I think — I know the administration is very serious 
about the concept of one-stop shopping. It comes up in a lot of dif- 
ferent contexts, and it comes up in defense conversion as well. 

It means a lot of different things to different people. It can mean 
delivery of the services from the Federal level in a more coordi- 
nated fashion. Also it means the community getting together so 
they can request the resources. 

Ms. MOLINARI. Let me use a specific example to show where I 
thought EDA played a role, and maybe I am wrong. 

You have a site that is a former military site. And a business is 
looking at it but it needs some environmental cleanup and EPA is 
not reacting as quickly as possible to evaluating this site and clean- 
ing it up. 

Who is responsible to make sure that EPA is doing its job and 
not holding up the entire development process? 

Mr. WiTSCHl. For defense-impacted, environmental contamina- 
tion, it is the Defense Department. The Defense Department — and 
I would defer to OEA as to what the actual details are of who is 
responsible over there — but the Department of Defense maintains 
responsibility for cleanup. 

Ms. MOLINARI. And what if it is not DOD's priority to move as 
quickly as an economic development agency may want to see the 
site cleaned up? 

Do we need to give you more teeth to force these agencies to do 
it? The Defense Department's number one mission is not to make 
a site economically desirable. And it is going to take some kind of 
congressional mandate, I might think. 

Mr. WiTSCHl. Well, I think there are two problems that you may 
be referring to. One is how long does it take to clean a site up? 

And the other is how interested is the Department of Defense or 
Corps of Engineers in doing it? 

Ms. MOLINARI, Right. And I think I know the answers, imfortu- 
nately, to both those questions. 

Mr. WiTSCHl. And the question of how long does it take to clean 
it up, sometimes — despite the interests of everyone, sometimes it 
takes a long time to get these sites to where they can accept rede- 
velopment. 

What we can do, and are trying to do right now, is to identify 
the places that are contaminated, identify the places that aren't, 
and concentrate our activities right now on the places that aren't. 

There are a number of different mechanisms to do that. That is, 
for example, one of the barriers that we are looking at through the 
NEC process. 

Ms. MOLINARI. For every site you talk about, I can think of an 
example where, if a water line is needed or a road needs to be 
built, that unless there is a central agency that understands the 
necessity to move as rapidly as possible towards this, the Federal 
bureaucracy will hinder conversion efforts, not help. Despite our 
best intentions of defense conversion, if there is not that person or 
agency, whose prime responsibility is to coordinate Federal co- 
operation, we are going to be wasting a lot of money, a lot of time, 
and a lot of good community effort. 

Is EDA equipped to do that, if they were authorized to do so? 

Mr. WiTSCHi. I don't know. It is very 



34 

Mr. Brennen. If I could use an example where we might be 
doing that on a per project basis, as much of a necessity as any- 
thing, is California. 

Ms. MOLINARI. You are going to a very busy State. 

Mr. Brennen. It does keep us very busy. 

In my region, which handles defense conversion work in Califor- 
nia, we actually formed a team within the office that includes legal 
counsel, an environmental person, and a senior engineer. We sent 
them on site to work directly with the community and work 
through the project in laborious detail. That is not a panacea. But 
it begins to solve the problems. 

We identified what we can do, even with the environmental prob- 
lems on a given site. We identified significant title problems on 
some of them. The base disposal process isn't as quick as we might 
like to see and that is important because, under our statute, for us 
to fiind it, the site has to be controlled by a public body. 

We have found by focusing our efforts in an interdisciplinary way 
into that area, we have hopefully broken some of the obstacles. 

But I can't overstate that the particularly base reuse projects are 
complex and costly. 

Ms. MOLINARI. Sure. 

Mr. WiTSCHl. I wanted to add one thing to what I have said al- 
ready, and that is that to some degree EDA, because it is involved 
in the implementation of the strategies, we get involved in the mi- 
nutia of the environmental cleanup and the transfer of property, all 
. of these things which must occur before we can actually have our 
investments proceed. 

So there may be some merit in EDA plajdng some kind of coordi- 
nation role because we are in the position to be held up if things 
don't proceed on schedule. 

Ms. MOLINARI. I think we all envision, fi-om a personal stand- 
point relative to our districts and from a very personal standpoint 
relative to the phone calls we are going to be getting fi-om constitu- 
ents, saying, where is the holdup, what is going on, what is the sta- 
tus, that we have that ability to make that one phone call to track 
where the problem is and then rectify the problem. 

And it seems to me from where we are going that EDA is the 
appropriate agency, but you may need more authorization to do 
that. 

Mr. WiTSCHl. We would definitely need more there. 

Ms. MOLINARI. Just one more question, Mr. Chairman. 

I know that the President's proposed budget terminates your 
trade adjustment assistance program because they believe that 
there is a duplication of effort there. 

Is the Department undergoing, in this reauthorization process, 
other reviews of other agencies for duplication? 

Mr. Smith. I don't think so. I don't remember a hearing 

Mr. Levine. I remember a hearing on trade adjustment. But 
what about others? I assume so. I don't know. 

Ms. MOLINARI. Who would know that, if you don't? Is it some- 
body fi*om the Clinton administration that is doing that review 
process? 

Mr. Smith. Really it is on the departmental level at this point. 

Ms. MOLINARI. Okay. 



35 

Mr. Wise. Except that from your statement I got the impression 
that you all weren't really looking to be actively involved in the di- 
rect loan program or the loan guarantee program very much, that 
there were other agencies that seemed to be handling that. 

Mr. Smith. As you know, we did have a program at one time, 
and it has been phased out. And this would be certainly something 
that the administration and your committee might be considering. 

Ms. MOLINARI. I am done, Mr. Chairman. 

I guess the last thing I wanted to comment on, Mr. Smith, as my 
counsel tells me, that you have had interaction with Tom Cruise. 

Mr. Smith. I don't sign my pictures. Matter of fact 

Ms. MOLINARI. No autographs. 

Mr. Smith. Matter of fact, they brought my secretary an auto- 
graphed picture of Tom Cruise yesterday. 

Ms. MOLINARI. I was just informed that they filmed part of the 
movie in Mr. Smith's office. 

Mr. Wise. I just want to make a sad comment, that environ- 
mental clean up is to Department of Defense what neurosurgery is 
to a podiatrist. 

I turn to Mr. Hamburg. 

Mr. Hamburg. Thank you, Mr. Chairman. 

I don't want to beat a dead horse here, but with respect to this 
whole issue of defense conversion and clean up and trying to assist 
communities that are hard hit, but I really can't help it because, 
perhaps like Congresswoman Molinari and many other Members, 
I face kind of £in economic catastrophe going on. 

And I am really curious about how these agencies are going to 
work together because even with the comments that have just been 
made, I am still not very clear about it. I don't know if it is just 
because I don't have a road map in front of me and I need that or 
what. 

But reading through some of the material that was given us to 
prep for this hearing today, I saw a phrase "defense economic in- 
vestment grants" used, and I don't quite understand what those 
are. Apparently that refers to $33 million on the $223 miUion re- 
quested for public works and development facilities and other eco- 
nomic investment. 

What are "defense economic investment grants"? 

Mr. WiTSCHl. Essentially, that is the implementation grants that 
I was speaking of. The community goes through the adjustment 
strategy process, and then we fund the assistance to help imple- 
ment those strategies. That is what that one is. 

Mr. Hamburg. Okay. And is it the OEA that is going to be tak- 
ing the lead in EDA works in conjunction with them and these 
other departments fit in under? 

Are they the coordinators of the strategy for communities that 
have base closings? 

Mr. WiTSCHl. They are the first players in the process. If there 
is a sequence in the process, it is: organization in the community 
first, then that organized community adopting a recovery plan of 
some nature, and then the implementation of that plan. 

Because OEA does the first two steps, they are, by definition, the 
first ones out to the community, and they provide the strategy that 
we play off of. So they are the leader in that respect. 



36 

As far as who is the leader from the overall coordination role of 
who is coordinating all the Federal resources that are going to 
come into play at whatever point in time, that is one of the issues 
that is being discussed over at the White House by the NEC right 
now. So OEA is the leader in time sequence right now because they 
are the first ones in. 

Mr. Hamburg. When the President recently talked about I think 
it was a $19.5 billion defense conversion strategy over the next I 
think it was four or five years, how big a part of that is EDA spe- 
cifically? Or can you even — can you break that down? I mean how 
big a role do you see yourselves playing? 

Mr. WiTSCHl. Well, the role for defense conversion covers a lot. 
There is a lot of stuff in defense conversion. It is technology com- 
mercialization, which is a major aspect of it. It is merging the de- 
fense industrial base with the non-defense base of the Nation. And 
then there is community adjustment assistance, both for the plant 
shut down type of events and the base closures. 

EDA's role is specifically with the commimity adjustment as- 
pects, for the base closures and the plant shut down assistance. 
And so I mean our role is a portion of what is generally referred 
to as defense conversion or defense downsizing or the conversion as 
related to the end of the Cold War. 

Mr. Hamburg. Secretary Smith, you mentioned a $130 million 
transfer from DOD. Is that — I guess that is for defense conversion. 
But is it earmarked for any specific type of activities by EDA? 

Mr. Smith. No. It is used for all the type of activities we use. 

Mr. Hamburg. Okay. I just want to put in my pitch for rural 
areas because the district that I represent which — I don't actually 
have a base in my district — if you were trying to figure out what 
bases in the first congressional district, actually there is Mare Is- 
land Naval Shipyard that is right on the edge of my district in 
Vallejo. 

We also have a small facility up in Humboldt County which is 
a naval facility in the town of Centerville. It is a small facility, and 
I don't actually know if OEA is going to come into play or if EDA 
will because it is part of the re^ignment rather than the closure. 

Do you deal with the small 

Mr. Smith. We deal with realignments. 

Mr. Hamburg. You would deal with realignment? Okay. We will 
be in touch with you on that. 

Just to get into the rural aspect, a lot of my district is losing jobs 
in just about every way imaginable. Our traditional resource base 
economics have been declining lately. The fishing industry is in 
trouble. The timber industry is in trouble. We have got military 
base closure in the southern end of my district. We are losing a lot 
of jobs to technology, you know, both in the timber industry and 
in a number of other industries. 

And, finally, we are experiencing a lot of jobs moving south. We 
have had a paper mill close down in our district, move down to 
Chile. We have had one of our major lumber corporations move 
part of its operation to Baja, California, another part to Venezuela. 

So we are suffering job loss on many, many fronts. And if you 
have any comments for me that can make me feel hopeful about 
what EDA's role is going to be in trying to help rural economies, 



37 

by that — the largest town in my district is 70,000 people and most 
of the towns are, you know, in the 5 to 20,000 range. And any spe- 
cific ideas you have or strategies, I would just like to hear you com- 
ment on. 

You don't really want to do that, do you? 

Mr. Smith. No. My comments — I was a regional director for a 
number of years, and I am familiar with the kind of scenario you 
are discussing. 

EDA has been working for a long time in the rural areas, and 
we have been very concerned with the out migration; we have been 
very concerned with the loss of jobs. That is why we really work 
with the district program. We feel that the institutional capacity is 
very important, stabilizing the economy by trying to get certain in- 
dustries to stay or expand. It is a very difficult program. 

The kind of scenario you discussed is experienced in a number 
of areas in the Midwest and in the particular areas in the South 
that had certain economies that were based on that and finding it 
changing. 

We can only say to you that we can work with you and make 
every effort to stem those kinds of tides. They are not easy. But 
we feel that even with the small programs that we run, once we 
do get a foothold where we can start changing some of that situa- 
tion around, I think that we can start creating additional jobs. 

I really understand what you are talking about. It is a very dif- 
ficult situation. 

Mr. Hamburg. Yes. Just a final thought. I don't think we can 
over emphasize the importance of this in small rural communities 
because — and we have talked about this in the fall committee and 
other subcommittees within the public, you know, within this 
structure. 

And the reason I wanted to be on this committee was because 
I recognized — and it doesn't take a rocket scientist to recognize — 
that economic growth in these small communities is totally depend- 
ent on infi*astructure. 

And when I talked to people who do small business development 
assistance programs, mamy of which get help from the EDA, about 
what the major impediments to economic growth in these small 
communities, it is always infrastructure, you know. And it is the 
fact that a business — a small business that wants to expand just 
a little bit and do something that is relatively simple, is hit with 
so many requirements by the local government in order to do that. 

And it is not that the local governments are mean or they are 
anti-growth in many instances, it is just they don't have the money 
to fund these themselves and they keep putting the onus on devel- 
opers. 

And sometimes in my district these are very small, small players, 
small businesses that are just trying to survive. And without help 
with infrastructure in rural areas, we just can't make it. We just 
can't move. 

Mr. Wise. Thank the gentleman. 

Mr. Hamburg. Yes, thank you Mr. Chairman. 

Mr. Wise. The gentleman from Georgia, Mr. Collins. 

Mr. Collins. Thank you, Mr. Chairman. 



38 

Mr. Smith, I will direct this question to you and then you can 
direct it to whomever you want to. First of all, we appreciate you 
gentlemen being here this morning. In the last Congress, the report 
which this committee filed accompanying the EDA reauthorization 
bill addressed the issue of the Title EX revolving loan fiind. 

And I will quote from the committee report: "EDA should publish 
a regulation declaring that once all EDA grant funds have been 
utilized by the grantee to make loans to the initial round of borrow- 
ers, funds subsequently loaned from the RLF shall not be consid- 
ered as being derived from Federal funds." 

EDA has contended that the law would not allow such a change 
but has never supplied this committee with a statutory basis for 
this claim. 

I have noted that EDA published a notice that it intends to pub- 
lish such regulations if legislation is enacted. And our unofficial in- 
quiries have indicated real desire on the part of EDA to do so. 

My question is: What statutory basis are you holding for your 
current position? 

Mr. Smith. Do want to answer that? 

Mr. Levine. Basically it is the appropriations act itself. 

But this is an issue that we have under serious study and are 
looking at with hopes of coming up with some sort of solution. 

Mr. Collins. That's your position? It will take statutory legisla- 
tion? 

Mr. Levine. That is correct. 

Mr. Collins. You can't do it with regulation? 

Mr. Levine. No, sir. 

Mr. Smith. No, sir. We would like to be able to take some of 
those responsibilities, there is no question about that. And that has 
been one of the subjects of the TQM reviews. 

But statutorily we — the IG and a number of other people indicate 
that we cannot do it that way. 

Mr. Collins. You would be supportive of such legislation? 

Mr. Smith. Yes, sir. 

Mr. Collins. One other question, Mr. Chairman. 

Mr. Wise. Would the gentleman yield? You raised an excellent 
question, and if I could follow up with you for a second, because 
this is a concern that has been expressed; and I think the gen- 
tleman from Georgia brings up an excellent point. 

Have you — do you have language that you feel you need in order 
to accomplish what the gentleman from Georgia seeks? 

Mr. Levine. We have several versions of language within EDA, 
and we don't have any specific proposal that everybody is com- 
fortable with. No. 

Mr. Wise. But is it something that is under active review? Be- 
cause this subcommittee would like to visit that area, and I think 
the gentleman from Georgia clearly indicates that. 

Mr. Levine. Yes. This was covered by the task force, and it is 
something we talk about regularly and are trying to work through. 

Mr. Wise. I would just urge you to do that. We would like to 
work with you to make that happen. 

I thank the gentleman. 

Mr. Collins. Thank you, Mr. Chairman. 



39 

The other question is: What requires more of your services, a 
strong economy or one that is headed into recession? 

Mr. Smith. Well, I have dealt with areas that have strong econo- 
mies; and, believe it or not, they ended up with higher unemploy- 
ment. 

I think our program is needed in both areas, at both ends. 

Mr. Collins. No particular one then would be more desirous of 
your services? 

Mr. Smith. Well, obviously, I think certainly when you are in a 
situation where you have got high unemployment, that is a long- 
term situation, yes, we do put emphasis on it. 

But I have seen situations where, when we have growth, that 
you also have significant problems. 

Mr. Collins. Thank you, Mr. Chairman. 

Mr. Wise. I thank the gentleman, and I thank him for raising 
an excellent point that this subcommittee needs to look at. 

Any further questions, statements, concerns? 

I want to th^ik the panel very much. I think it has been a good 
discussion. You have given the subcommittee a lot of assistance. 
The subcommittee will be holding additional hearings, hopefully, 
one — if we can work out the times — ^hopefully one sometime during 
June. 

We would like to move-I would like to try to move towards look- 
ing at a markup this summer. And so, therefore, it becomes very 
important that we have the administration's proposals before us so 
that we can do that. 

The subcommittee also — and I am going to be asking our staff, 
they are not aware of this yet, so I think I ought to alert you to 
that — I am going to be asking our staff to meet with you to go over 
some of the issues that have been raised here, particularly to follow 
up even more in-depth on the quality assurance teams, the TQM 
process, and how the process is changing; and also on the relation- 
ships between the regional offices and the Washington office, both 
at the counsel level and the departmental level, because I think 
that is something that is essential in this process of getting maxi- 
mum flexibility, at the same time preserving stewardship of Fed- 
eral fiinds. 

I want to thank you, Mr. Smith, and the others who are here, 
for your assistance and in the efforts you have made and the work 
that you have done with the subcommittee, as well as Mr. Reese 
and Mr. Lee for making the effort to be here today. 

At this time, I declare this hearing adjourned. 

[Whereupon, at 11:48 a.m., the subcommittee was adjourned.] 



PREPARED STATEMENTS SUBMITTED BY WITNESSES 



Statement of Steven R. Brennen 

I would like to thank you, Mr. Chairman, and the Members of the Subcommittee 
for inviting me to be here today. Before addressing some of the specific points you 
raised in your invitation letter, I would like to make some general comments about 
successful economic development and the role of the U.S. Economic Development 
Administration (EDA). 

If there is a truism in economic development, it is that the only substantial and 
long term successes come from strategies conceived at the local level. This can only 
occur if there is strong community leadership and broad civic support. The key word 
here is local. Meeting an economic development opportunity or solving an economic 
development problem can only occur through means of a locally devised strategy. 
One can then ask what role EDA should play in such a fundamentally community- 
based process. I would argue that EDA's programs operate in a manner that not 
only supports local economic development, but catalyzes and nurtures it in areas 
where such help is critical. The first is by providing a planning infrastructure — 
funding economic development districts, tribal organizations and state and local 
planning functions. In this way EDA helps people through their local and regional 
organizations to think about and plan their economic future. This helps them to 
grow their economy at the pace and direction they wish and prepares them for the 
difficulties of any local economic downturn. 

Communities then come to EDA with their priorities and their prescriptions for 
economic development. EDA assists them through an array of potential tools includ- 
ing business finance, public works construction and technical assistance. Yet, the 
idea, the project if you will, is conceived and controlled by the community. In the 
most positive way, EDA is reacting to the community's needs as they see it and not 
formulating a prescription for them. EDA's is not a traditional categorical grant pro- 
gram that presumes the wisdom of the Federal Government. 

I will now discuss some of the points the subcommittee wishes addressed. Jack 
Corrigan, Regional Director of EDA's Philadelphia Office, will discuss the remaining 
points. 

The effectiveness of Economic Development Districts 

The value of the Economic Development District (EDD) is something to which I 
believe I can speak authoritatively, given my experience in EDA's Denver Region. 
There are 50 EDDs in this region. These EDDs provide the backbone of both EDA's 
programs and overall successful economic development. In highly rural areas the 
multi-county districts are essential in bringing needed economic development exper- 
tise to bear. There just is not the critical mass of resources in these sparsely popu- 
lated areas to support the staff and attention needed for good economic develop- 
ment. Without EDA's funding support, I doubt whether a good number of these or- 
ganizations would exist; they certainly could not provide the services they now do, 
and some regions would subsequently suffer. 

Growth Centers provide an opportunity for EDA investments to stimulate growth 
in a community for the benefit of more highly distressed areas surrounding it. The 
ability to assist growth centers is an important tool for EDA. 

The District Bonus Program provides an incentive for an area to plan more effec- 
tively on a region wide basis. The availability of a ten percent bonus for an EDA 
project can serve to bring some localities into a process they may have previously 
shunned. This incentive is even more important given the very limited dollars avail- 
able to fund new EDDs. 

The Direct Loan and Loan Guarantee Program 

EDA has not provided any direct loan assistance since 1982. The loan guarantee 
program was discontinued last year. As you are aware, EDA's experience with this 
program was mixed, at best. Part of the problem could be attributed to the fact that 

(41) 



42 

EDA was required to be a "lender of last resort." EDA's loan and loan guarantee 
programs required findings that credit was not available to a firm fi-om sources 
other than EDA, yet there had to be a reasonable assurance of repayment. This 
seeming contradiction greatly narrowed the universe of potential borrowers. 

It should be noted that the Title K Revolving Loan Fund (RLF) Program may 
meet a need in this area. In the Denver Region, EDA has capitalized over 42 RLF's 
for $24 million. This is a highly successful program from nearly every point of view. 

Economic Adjustment 

The programs authorized by the special Economic Adjustment provisions of Title 
DC of our Act are growing in both funding and importance. The real need for special 
adjustment assistance and EDA's ability to respond aggressively and flexibly in such 
situations is crucial. 

Right now, EDA is heavily engaged in defense conversion efforts. The Department 
of Defense (DOD) has transferred in two increments $130 million to EDA to assist 
communities experiencing the effects of defense downsizing. The FY 1994 Budget re- 
quests another $33 million for this purpose. These funds are to help areas experi- 
encing base closings or reductions in DOD contracts. 

In defense adjustment, EDA is helping in two ways. First, with DOD's Office of 
Economic Adjustment, EDA helps bring the attention of the whole community to the 
need for devising a strategy for dealing with the cutbacks. Strategy implementations 
can and have included everything from creation of an industrial park to the estab- 
lishment of a high technology council. When the strategy is completed EDA in many 
instances helps implement portions of it. To date, the Denver Office has been active 
in numerous base closings and contractor reductions. 

EDA's ability to assist quickly under Title DC programs is pointed out clearly in 
the agenc/s involvement in response to the Los Angeles riots. The agency was able 
to have grants ready that were responsive to what local leaders needed within three 
weeks of the riots. This was a priority of the local governments, and EDA was one 
Federal agency that could do so in a timely manner. This instance points up the 
value of Title DC's flexibility. It also is a good example of how EDA supports and 
not directs local economic development efforts. 

The effectiveness of Title VI 

Title VI of EDA's authorizing legislation, the Public Works and Economic Develop- 
ment Act of 1965, as amended, contains the provisions for administering the Agency 
and the creation of an Advisory Council for Regional Economic Development and 
other consultation mechanisms. Since my time at the Agency no formal advisory 
body has existed so I feel ill-equipped to comment on this topic. As I have stated 
earlier, EDA believes its programs are community — driven so it is constantly work- 
ing with those outside the agency to improve its service. 

This concludes my formal statement. I would be happy to answer any questions 
the Subcommittee may have for me. 



Statement of John E. Corrigan 

Mr. Chairman and Members of the Subcommittee, thank you for inviting me to 
discuss my experience with the Economic Development Administration (EDAX As an 
EDA employee, I appreciate our agency being, in Secretary Brown's words, "... a 
critical element in the Administration's program to create jobs." 

I would also like to be associated with the comments of my colleague and fellow 
Regional Director, Steve Brennen, on the importance to EDA of local strategies and 
community-driven programs and projects. We are proud of EDA's unique system of 
assisting local economic development initiatives, and we look forward to making 
EDA's assistance delivery system even better. 

Let me now address the remaining points raised in the Subcommittee Chairman's 
letter of invitation. They were the subjects of public works grant processing; decen- 
tralization of approval authority; and eligibility of areas for EDA assistance. 

Public works grant processing 

The Economic Development Representative (EDR) generally makes EDA's first 
contact with the applicant, to discuss apotential project conceived and defined by 
local officials and community leaders. This conceptual project development phase, 
which averages nine months, culminates in the submittal of a formal 
"preapplication" to EDA. 

Preapplications are reviewed and final applications are invited on the basis of 
merit in competition with many projects from throughout the region. Selection is 



43 

based on EDA project reviews, undertaken in the Regional Offices and in Washing- 
ton. 

A Preapphcation Conference usually occurs after an application has been invited 
and before the community submits the formal application. In its most complete 
form, it involves representatives of the different disciplines in the regional office 
meeting with the applicant and other staff and consultants working on the project. 
It has proved to be a highly effective means of resolving issues that could delay 
project approval. 

Applications are received and processed in the regional office and cleared by the 
Regional Director. Projects cleared are those recommended to the Assistant Sec- 
retary for approval. The processed application is forwarded to Washington for com- 
pletion of the processing cycle. 

The Financial Assistance Review Board (FARB), which has been in existence for 
approximately twelve years, is the Department of Commerce's mechanism for coordi- 
nating grant assistance among the different agencies in Commerce, assuring consist- 
ency in the process, and determining whether an applicant has an outstanding unre- 
solved debt to a Departmental agency. The FARB review is done concurrently with 
the EDA Washington project review. 

PWIP projects 

The purpose of the Public Works Impact Program (PWIP) is to provide construc- 
tion jobs in areas where the construction industry is depressed and construction un- 
employment is high. PWIPs are required to complete design and start construction 
within 120 days of grant approval and complete construction within 12 months of 
starting construction. 

Public work loans 

Public Works Loans were approved from 1966 to 1978. Interest rates were at one- 
half percent below the Treasury rates and maturities ranged up to 40 years. These 
loans were used both to supplement EDA public works grants and as a stand-alone 
program. This program was successful in funding needed projects and, due to a low 
default rate, EDA is recouping its funds with interest. One of the main purposes 
of the program was to provide poor communities with the required local match for 
our grants. 

Decentralization of approval authority 

From the late 70's to 1981, EDA Regional Directors were delegated grant approval 
authority for Public Works projects up to $750,000 and loan approval authority up 
to $1,000,000 for Business Loans, as well as certain other pre- and post-grant ap- 
proval authorities. This authority was rescinded in 1981 at a time when the then 
new administration indicated that EDA's programs would not be continued. 

The Regional Director currently has approval authority for annual continuation 
grants in two programs: 301(a) University Centers and 301(b) Planning Assistance; 
in addition, approval delegation exists in two programs for grants not exceeding 
$25,000: 301(a) Local Technical Assistance and Title DC Targeted Adjustment Strat- 
egies. 

Eligible and authorized areas 

Current eligibility criteria for program funding gives priority to areas suffering 
from substantial and persistent unemployment above the national average for a 
twenty-four month period. Of the many arguments against continuing support for 
EDA, perhaps the most often heard is that 'Eighty percent of the country is eligible" 
for EDA grants. Of course, eighty percent of the country does not receive funding 
from EDA each year, and in fact the great majority of EDA assistance goes to areas 
that have very high distress and unemployment. The Economic Development Rep- 
resentatives and the Regional Office often discourage projects from areas that are 
not distressed. 

Provision for temporary eligibility may be one way to eliminate the criticism that 
eighty percent of the county is eligible. Rather than designating an area on a formal 
basis, the agency could certify eligibility according to current statistics prior to ac- 
cepting an application for Title I, public works assistance. 

I will be pleased to answer any questions that the members may have. 



Remarks of Mr. Frank Lee 

To Mr. Chairman and Members of the Committee, It is Indeed an honor to appear 
before this body. 



44 

As a native Washingtonian, I have a sense of deep respect for the traditions of 
the Congress, and I think, a meaningful appreciation of the burden of leadership 
each of you must bare. The decisions are hard, the alternatives are always complex, 
and yet each one is of vital importance affecting the lives of thousands of U.S. Citi- 
zens. Certainly this process is made even more difficult by the complex economic 
times in which we live. I am now a West Virginian but before beginning my formal 
remarks, I wanted to take this opportunity as one who has lived both inside and 
outside the beltway to say thank you to each of you for your service to the people 
of my State and our Nation. 

I feel that in some small sense that same burden of responsibility this morning 
because West Virginia reflects the paradoxes and diversity of economic development 
in 1993. Our citizens are proud people, our government is progressive, innovative, 
and aggressive in the areas of economic development. Our Governor, Gaston 
Caperton, I believe, has deservingly earned a national reputation for his innovations 
in the areas of education and economic development. But there is much to be done. 
My county consistently experiences double digit unemployment. We are faced with 
significant infrastructure problems throughout our State. It is this paradox of ag- 
gressive modem economic development programs, coupled with infrastructure defi- 
ciencies and high unemployment that make the Mountain State a textbook example 
of the need for the EDA and the AAC. I will not take up the committees time by 
reciting the statistical analvsis of these programs impacts upon my State or the Ap- 
palachian Region. That inmrmation can be characterized more accurately and pro- 
fessionally bv your staff. I would, however, like to focus on some challenges and op- 
portunities lOT improvement that would allow these important programs to become 
more effective functioning tools in the important work of economic development. 

Candid assessment of the economic impact of these important legislative programs 
requires some comment upon the role of the economic development district. Or as 
it IS known in West Virginia, the Regional Planning and Development District. The 
District in which I reside. West Virginia Region 11, headed by exemplary profes- 
sional, Ms. Michelle Craig, is a key partner to our regions efforts in economic devel- 
opment. In West Virginia and throughout the Nation, these organizations perform 
a variety of needed functions and carry them out on a next door neighbor hands 
on basis that I find to be most effective. One program I would like to highlight are 
business incubators to help small businesses by providing services such as word 
processing and financial management. The Economic Development Council of North- 
eastern Pennsylvania helped to raise $1.4 million to inquire and convert an old 
building into a business incubator. The 19 tenants now employ 115 workers. This 
is government £ind the private sector working hand in hand in an effective manner. 
Number 2, small business financing and revolving loan funds have proven time and 
time again to be of valuable assistance to local economic development. Careful ex- 
amination needs to be made of these programs in order to enhance their effective- 
ness. Number 3, land use and transportation planning — cities and counties in rural 
areas cannot often afford the staff to professionally develop and implement land use, 
zoning, and transportation planning. The expertise provided by the Economic Devel- 
opment Districts brings up-to-date techniques and expertise to bare on the local sit- 
uation. Number 4, technical assistance to local governments — besides providing 
g-ant administration, packaging, and technical assistance to local government, the 
evelopment Districts also provide a much overlooked service of regionalized co- 
operation and planning. The ability to package the needs of several small commu- 
nities together thus making a viable project. Other important services provided by 
these organizations include assistance in solid waste management, natural resource 
conservation, recreation tourism historic preservation, job training, services for the 
poor, elderly, and emergency services. Whether it's the creation of a 911 System in 
Southwest Arkansas or assisting with a Teacher's Workshop in Michigan. The Eco- 
nomic Development Districts continue to play an important role as a partner in gov- 
ernment and business at the local and regional level. 

The next item I am about to call to your attention is the Growth Center Concept. 
In my conversation with development officials when they speak off the record a 
trend seems to develop. Growth centers whether primary or secondary tend to be 
developed along social and political lines. There seems to be difficulty in finding an 
appropriate definition. In some states, every county has a Growth Center, and those 
that don't will auickly develop one in order to accommodate the social and political 
pressure exerted on those administering the program. This area needs examination 
and while I do not have specific recommendations to remedy the problem I am con- 
fident that it is an area that needs improvement. 

"Technical Assistance Grants are a marvelous tool for economic development. 
These specifically targeted funds time and time again have made the difference be- 
tween a job creation project becoming a reality or another study gathering dust on 



45 

the shelves. I urge this committee to focus upon this important area and procure 
additional funding and then examine the procedures and guidelines to make them 
even more effective. This is a program that works; it just needs to be made a bit 
more efficient. 

The processing of apphcations for Public Works Grants and the preappUcation 
process is an area that I would recommend to this body for further study. In my 
State we are fortunate that our EDR and the Regional Office that serves West Vir- 
ginia are staffed by exceptional professionals. A very candid appraisal would cause 
one to ask the question of how much can a single person effectively do. Subsequent 
to the preappUcation project, each and every request in our State is examined by 
a single inmvidual. That person works out of an office with a telephone, computer, 
I assume a fax machine, out no secretary orders the staff. Out of the 55 counties, 
I can't see how any individual can effectively provide for the needs of local govern- 
ment, development districts, individual economic developers, and citizens in an ef- 
fective manner. It is simply too much work for an individual to do. Additional staff- 
ing needs to be provided. It's one thing to have funding available in a valid program. 
It is quite anotner to bring that program to bare in a timely m ann er to maJce it 
an effective economic development tool and much needs to be done in this area. It 
is also interesting to know tnat the entire development effort of the State may rise 
or fall on the experience, confidence, and judgment of a single individual. The EDR's 
have total prioritization power. This is both good and bad. It provides direct access 
to Federal Programs in tne local level. This policy may or may not allow the EDR's 
decisions to coincide with the goals of State Government which has been entrusted 
with implementing numerous sources for federal funding to solve problems of the 
economically disadvantaged. I would urge you to look at finding a balance between 
individual access to EDA programs and effectively insuring that needed dollars are 
implemented in the most cost effective manner as part of a total economic strategy 
for a State or Region. I think this area is particularly significant in Regions that 
may be understaffed as my previous comments have indicated. All of us in order 
to be effective professionals need time to plan, reflect, to step back and look at the 
overall picture. This is hard to do when tne workload is stacked to the ceiling and 
the phone is ringing off the hook with client's demanding Euiswers and responses. 

I would like to urge this Committee to look at the concept of matching funds. In 
my area, we are participating with several defense industries to form a high tech 
consortion of universities. However, the defense conversion program requires dollar 
for dollar matching money. This is an economic barrier making it impossible for 
anyone other than traditional large research organizations to participate. What 
needs to be addressed is the cost of matching money. I realize the intent is to lever- 
age valuable conversion dollars. However, I do not believe that excluding thousands 
of excellent scientific minds and the infusion of a fi-esh perspective into the tradi- 
tional research community could have any effect for the positive one. I believe that 
which is gained from such a policy would yield an even greater result for the tax- 
payers of this country. 

Lastly, I would like to suggest a Fast-Tracking Concept to aid in real job creation. 
If you would allow me to make a distinction between projects that have the poten- 
tial to create jobs and projects that will result in immediate job creation, I think 
we would all agree that the priority should be given to those which would put Amer- 
icans to work as soon as possible. There are valuable resources that can be used 
to further economic development under these pieces of legislation. The problem 
comes in with the implementation. With a nine to ten month review and approval 
time the program cannot be brought to the table. If you further consider that after 
receiving approval the federal guidelines must be followed that require specified en- 
vironmental advertising, bidding, procedures, etc. The end result is this, I tell my 
client I have a wonderftil program that could be the final piece to make your project 
liable and it will be a year before I can bring my money to the table and by the 
way I've got to certify that you have not commenced your project prior to my receiv- 
ing those approvals. Thus, good programs are not used for immediate job creation 
time and time again. These needed dollars go towards projects which have the po- 
tential to create jobs but not the certainty. To remedy this, I am recommending a 
Fast-Tracking Program be put in place. In addition to legislative changes 
nonprogrammatic changes need to be made to State and Federal Procurement Pro- 
cedures and Guidelines. By making the Federal Government a timely participant in 
the economic development process, we could create thousands of jobs in a relatively 
short time frame. This one single change could have significant impact and I believe 
more return on the investment of our tax dollEirs. 

Again Mr. Chairman and Members of the Committee it has been am honor for me 
to appear here today. As an enthusiastic supporter, all the EDA and ARC, I hope 
that my comments will be received in the context they are intended. That is let's 



46 



take a good and effective program and make it better. I believe that this subcommit- 
tee has the opportunity to dramatically impact economic development across Amer- 
ica and by changes in program policy and funding levels to put numerous Americans 
back to work quickly. Thank you for the opportunity to appear today. 



Testimony of Michael Reese 



Mr. Chairman, members of the sub-committee on economic development, my 
name is Michael Reese, and I am the executive director of the Mohawk Valley Eco- 
nomic Development District. It is my opinion that the reauthorization of the eco- 
nomic development administration is one of the most important components of any 
economic recovery plan considered by the Federal Government. The most critical 
problem facing America today is providing jobs for its people. If this country is going 
to win the war against crime, drug abuse, spouse and child abuse and poverty, it 
will have to provide long term, good paying jobs for its citizens. During the past few 
years, without reauthorizing legislation and without adequate resources, EDA has 
continued to be a strong partner in the economic development of the Mohawk Valley 
Region of New York State. My region is predominately rural in nature and suffers 
from decades of economic decline. By utilizing EDA to fund the necessary infrastruc- 
ture improvements for industrial development, we have begun to stem this tide of 
decline. We now have hope for economic growth in the future, but the job is far from 
finished. There are still many unmet needs that have to be addressed if this region 
is going to provide jobs for its residents. Now, more than ever, we need to have the 
continuation of the economic development administration, which can and should 
play a central role in providing federal economic development resources to projects 
that will help to retain existing jobs and create new jobs for the unemployed and 
underemployed. . j , ^ j 

I would like to discuss three important aspects of the economic development ad- 
ministration that should be included in the reauthorization bill. The first is the 
present system of using economic development districts to access the programs of 
the agency. With the assistance from an EDA planning grant, my five counties work 
together to develop a strategy and identify projects in our annual overall economic 
development program. The "carrot" of having their projects eligible for EDA funding 
has kept the region working together, something that would not continue if the 
present system were eliminated. The concept of regions working together to collec- 
tively solve problems and implement strategies, is one that works and should be en- 
couraged to continue. This system allows each region to set its own priorities and 
seek funding for projects that will provide real economic benefits to the area. The 
regional economic development planning performed by economic development dis- 
tricts is one of the only ways that local government officials (many of whom are 
part-time) have input into a regional strategy that provides a coordinated approach 
to future development. One concern that we continue to deal with, is the lack of ade- 
quate financing of the District Planning Grant Program. As an example, mv distnct 
has received the same level of assistance each year since 1986. EDA staff has done 
its part by providing planning grantees with new OEDP regulations, in the spring 
of 1992, that will make our annual strategies even more useful. Now we need an 
increase in the appropriation for planning grants so that districts can continue to 
provide the appropriate level of service to their regions. 

Another vital aspect of the economic development administration is its title I pub- 
lic works grants. This has been EDA's bread and butter program, and it is as impor- 
tant today as it was when the agency was founded. One of the most difficult chal- 
lenges faced by local governments is their ability to develop good quality public in- 
frastructure for industrial development. A community's ability to retain or attract 
industries is directly tied to its ability to provide these public services at an afford- 
able cost. However, in regions that have experienced a lack of economic growth, 
such as the Mohawk Valley, local governments cannot afford these improvements 
without assistance from agencies like EDA. A recent project in the City of Johns- 
town in Fulton County, is a good example. Johnstown was under a consent order 
from the health department to filter its water. The construction cost of a filtration 
plant was $7.7 million. If Johnstown had to bear the entire cost of this project, the 
cost of water to the leather industries located in the city would have been at a rate 
that would cause many to close their facilities, adding hundreds of workers to ttie 
ranks of the unemployed, in a county with an unemployment rate of 10 percent. The 
solution was assistance from EDA. The City of Johnstown was awarded a $2 million 
public works grant. With this partnership between the local government and the 
Federal Government, the public health standards were met, and Johnstown will be 
able to retain its largest industrial sector. 



47 

One area of the Title I program that needs to be improved is the time it takes 
from the submission of a pre-appUcation to final approval. I understand that the 
agency is currently working on streamlining this system, which will be most wel- 
come at the local level. Many times, communities need to have a prompt response 
to their applications, and the present six months processing time can become an ob- 
stacle. The application process itself is not broken. The use of the pre-application 
allows a community to seek assistance without incurring a great up-front cost. It 
also allows the agency the ability to rate projects and invite the most worthwhile 
projects to final application. And, one of the most effective aspects of the present 
system is the use of State Economic Development Representatives (EDR). Our State 
EDR is an invaluable service to the district and the applicant communities. This 
program, like the planning grant program is severely underfunded. My current five 
county region has approximately $100 million worth of public infrastructure projects 
that, if funded, would provide a direct economic development benefit. These commu- 
nities are in competition for a nation-wide appropriation of $136 million in the pub- 
lic works program. As I mentioned earlier, the EDA is uniquely positioned to play 
a vastly expanded role in providing Federal economic development resources to local 
projects. I would recommend that Congress look very closely at all Federal agencies 
that have some economic development activity and determine if it would be more 
appropriate for the Economic Development Administration to carry out this activity. 
I am not being critical of other agencies, however, it seems to me that if the primary 
focus of an agency is housing then it should direct its attention to housing; if the 
primary focus is agriculture then it should direct its attention to agriculture; and, 
if the primary focus is economic development, as is EDA's, then it should handle 
the economic development programs. This may be a way to increase the appropria- 
tion for the Title I public works program, without adding new spending to the budg- 
et. 

The third aspect of the reauthorization bill that I would like to comment on con- 
cerns the EDA Revolving Loan Fund Program, which is part of Title K. The 
MVEDD has administered an EDA revolving loan fund since 1979. With approxi- 
mately $1.6 million of EDA funds, we have been able to finance 132 businesses with 
$5.5 million in loans. And, we have been able to leverage an additional $39.5 million 
in loans from the private sector. These projects have created job opportunities for 
3,000 people. When you divide the $5.5 million in loans by the 3,000 jobs, the result 
is a job cost ratio of $1,833 per job. By comparison, most economic development pro- 
grams gauge their success by using job cost ratios that range from $10,000 per job 
to $35,000 per job. Locally controlled revolving loan funds have become one of the 
most effective tools available to stimulate job creation in small businesses, where 
most of the growth in jobs is taking place. This is particularly true in areas of stag- 
nate growth, because there is a general lack of interest from the private sector fi- 
nancial institutions in these areas. As banks have consolidated and regulators have 
become more strict, small business people are having a more difficult time arrang- 
ing all of their financing from the private sector. By using the EDA revolving loan 
fund as a gap financier, we are able to package deals with the private sector that 
otherwise would not meet their underwriting requirements. The EDA revolving loan 
fund is a natural complement to the Title I program. Title I provides the public in- 
frastructure necessary for development, and the RLF provides the capital to allow 
companies to expand and create jobs. 

In conclusion, I want to stress the necessity to reauthorize the Economic Develop- 
ment Administration. I strongly urge you to include the economic development dis- 
tricts, as the primary access point for EDA programs, in the new reauthorization 
bill. I would also strongly urge you to include the Title I and the Title IX programs 
in substantially the same format as now exists. 

Thank you Mr. Chairman, and members of the subcommittee. I will be glad to 
einswer any questions you may have. 



Statement by the Acting Assistant Secretary of Commerce for Economic 
Development, Craig M. Smith 

Mr. Chairman and members of the subcommittee, thank you for providing me 
with the opportunity to appear before you today to discuss reauthorization of the 
Public Works and Economic Development Act of 1965. We are pleased and excited 
that, for the first time in twelve years, the President will join with Congress to sup- 
port the programs of the Economic Development Administration (EDA). We believe 
we are entering a new era of productive cooperation between the legislative and ex- 
ecutive branches to address the nation's economic development needs. 



48 

In furtherance of that cooperative spirit, I would like to address the issues you 
raised in your invitation to me to testify today. We have already submitted detailed 
exhibits regarding these matters and will be happy to answer any questions you 
may have at the end of the prepared statement. 

PROJECT FUNDING 

Fiscal year 1993 project funding is moving at a significantly faster rate than in 
FY 1992. For example, through the end of April or this year a total of $91.7 million 
had been obligated for 100 public works grant awards. During the same period in 
FY 1992, EDA had obhgated only $52 million for 77 public works projects. To state 
it another way, in FY 1993 EDA obligated 59 percent of its public works funds dur- 
ing this period while it had obligated only 33 percent at the same point in FY 1992. 

DEFENSE CONVERSION/HURRICANE RELIEF 

EDA is presently involved in a significant way with defense conversion activity, 
both with base closings and defense cutbacks. Of the $130 million transferred fi-om 
the Department of Defense, the first installment of $50 million was received in Feb- 
ruary 1992 and the second installment of $80 million was received in March of 1993. 
To date, EDA has invited approximately $70 million in projects of which 19 grants 
for $24.4 milUon have been awarded, 23 applications for $38.4 million are being 
processed, and an additional 13 projects for $7.4 million have been authorized. 
EDA's defense conversion role is essentially to implement critical elements of base 
reuse plans or community adjustment strategies. In most cases, the plans and strat- 
egies are developed with the assistance of DOD's office of economic adjustment with 
whom we coordinate our investment decisions. We expect the demand for defense 
conversion assistance to accelerate as more communities complete their economic 
adjustment strategies or base reuse plans. It may, however, be several years before 
environmental and other base transfer issues are resolved and EDA assistance can 
. be used by some of the affected communities. It is also becoming apparent that the 
infrastructure investments critical to a community's ability to reuse a base are gen- 
erally far more costly than EDA is accustomed to funding. 

EDA has also been very active in assisting with the economic recovery of areas 
damaged last fall by Hurricanes Andrew and Iniki and Typhoon Omar. Of the $70 
million appropriated for this purpose, 19 grants for $19.4 million have been award- 
ed, an additional 17 applications for $26.6 million are being processed, and nme 
project applications for $19.8 million have been invited. Approximately 75 percent 
of the $70 million has been targeted to address damage caused by Hurricane An- 
drew in Florida. EDA established a temporary Miami field office and the staff have 
worked closely with the impacted communities to review more than $130 million in 
project proposals. This successfiil operation is winding down as project development 
efforts are substantially completed and the office will be closed at the end of June. 

Los Angeles Riots/Urban Distress 

EDA moved rapidly to alleviate the damage caused by the civil disturbance in Los 
Angeles last year. Through its Title DC special economic development and adjust- 
ment assistance program, a $3 million grant was awarded to rebuild LA to develop 
a strategy to assist business locate in the affected area and a $1.5 million grant was 
made to the Los Angeles convention and visitors bureau to help restore the tourism 
industry and related employment. Over 85 percent of the Los Angeles tourism in- 
dustry work force is minority, many of who live in the riot affected areas. 

The California recovery is another policy initiative in which EDA is involved. TTie 
President recently asked Commerce Secretary Ron Brown to be the lead cabinet offi- 
cer for this effort and to craft a coordinate Federal/local response in stimulating the 
California economy. Teams of EDA specialists have begun holding meetings 
throughout the state to assist economically distressed areas establish, or re-estab- 
lish, their employment base and to aid in the defense conversion efforts in the area. 
EDA expects to participate in the California recovery efforts throughout its defense 
adjustment and regular programs. 

Regarding economic distress in urban areas in general, EDA continues to be com- 
mitted to meeting the needs of distressed urban communities. The agency's FY 1993 
notice of funds availability recognizes this commitment by stating that EDA is par- 
ticularly interested in projects located in authorized and designated enterprise 
zones. Historically, EDA has invested approximately 25 percent of its resources in 
urban areas. 



49 

TOTAL QUALITY MANAGEMENT 

In addition to the quality action team efforts I will address next, EDA has under- 
taken two major TQM initiatives. The first of these, the excentralization steering 
committee, was established to streamline the grant application process. This effort 
had two main thrusts, the elimination of unnecessary and/or duplicative steps, and 
the redesign of grant application forms to make them more user fiiendly and limit 
the information requested to that which is necessary for project review and ap- 
proval. As a result of this effort, the public works application process has been im- 
proved and draft application forms have been developed. 

Implementation of these new forms, however, will not go forward until the second 
EDA TQM initiative, the process re-engineering committee, finishes its work. This 
committee is concentrating on ways to reduce the average time required to process 
a public works gp-ant. Our goal is to have the average processing time reduced to 
four months. This effort may well require further paperwork modifications, so we 
will not forward final new application forms to 0MB until the committee's work is 
complete. The new process is expected to be ready for a pilot test to begin this Au- 
gust with final recommendations completed by the end of the year. 

QUALITY ACTION TEAMS 

The program review and improvement activities represented by the Quality Ac- 
tion Teams (QATs) are already paying dividends for EDA's clients. The mjgor find- 
ings and Recommendations of the specific efforts include; 

Economic Development Districts QAT: This QAT issued its final report in De- 
cember 1992 with its recommendations grouped into eight areas — evaluation of 
performance, program requirements, fvmding, overall economic development 
program, training, technology, uniformity versus flexibility, and other related is- 
sues. The recommendations of the QAT were used in determining how to allo- 
cate the $2.2 million budget increase made available to the district program in 
FY 1992 and to implement the two percent cutback enacted in FY 1993. 

University Center QAT: This QAT was established in January 1991 to de- 
velop recommendations for improving the operations and administration of the 
university center program. The final report was issued in September 1992 and 
contained recommendations concerning 21 program areas. EDA has already 
moved forward to implement the recommendations concerning university center 
performance evaluation, avoiding duplication of services in areas with small 
business development centers, and limiting the allowable indirect cost rate 
sponsoring institutions can charge the program. We continue to pursue a num- 
ber of the other recommendations of the report. 

Revolving Loan Fund QAT: The Revolving Loan Fimd (RLF) QAT issued its 
final report in June 1991. The report contained recommendations concerning 
twelve major RLF program policy areas. Since that time, EDA has undertaken 
a major overhaul of its RLF policies and administrative procedures which are 
documented in a new RLF administrative manual, revised RLF plan guidelines 
and new RLF grant terms and conditions. Efforts are also underway to prepare 
a new RLF lending manual, RLF audit instructions, a companion internal ad- 
ministrative directive and guidelines for communities preparing an economic 
adjustment strategy. These efforts are already improving the delivery of RLF 
assistance and will lead to further improvements in the months ahead. 

Public Works Program Evaluation: This evaluation was undertaken by an 
outside consulting firm and was completed in March 1992. The study was de- 
signed to assess the range of factors that impact a project £ind identify those 
factors that have the greatest influence on project performance. The major find- 
ings of the study were that public works projects were meeting their objective 
of helping distressed communities; Public Works Projects are long-term in na- 
ture and their performance should be assessed over a twenty-year period; 
Projects providing basic infrastructure to wide areas and diverse users have 
greater long-term impact; and that grantee institutional capacity is often the 
most important factor in project success. This report is currently under review 
within the agency for implementation of those recommendations that would 
strengthen the Public Works Program. 

ECONOMIC DEVELOPMENT REVOLVING FUND STATUS 

The unobligated balance of the revolving fund at the start of fiscal year 1993 was 
$134.6 million. It is estimated that by the end of this fiscal year, the unobhgated 
balance will be $137.6 million. While future year revolving fund balances are dif- 
ficult to estimate, it is quite possible that environmental cleanup costs associated 



50 

with sites for which EDA is responsible will seriously deplete the revolving fund. 
Included among our submissions to the committee is a report on actual revolving 
fund activity for fiscal years 1991 and 1992 and estimatea fiind activity for fiscal 
years 1993 through 1998. 

ECONOMIC DEVELOPMENT REPRESENTATIVES 

The migor responsibilities of the economic development representatives include: 
Advising public and private officials and organizations on economic develop- 
ment issues and programs; 

Analyzing current State, county and local public and private efforts to achieve 
economic development given their existing resources and impediments; 

Assisting local, county and State efforts to organize economic development 
committees and action groups; 

Providing information concerning the broad range of EDA's programs and ad- 
vice on how those programs can be utilized to meet specific State, regional or 
local economic development needs; 

Counseling and assisting applicants in the preparation of required application 
materials, assessing the suitability and potential of proposed projects and rec- 
ommending projects for consideration by the regional project review committee; 
and 

Being a source of current information concerning other Federal and State pro- 
grams that can support economic development efforts £uid referring potential 
applicants to those sources in support of, or in place of, EDA assistance efforts. 
(Jack Corrigan will expand upon tne role of the EDR) 
Included in the materials submitted to the committee is a list of the current 
EDR's, the areas they serve and their addresses. 

In response to your other request regarding EDA directives and operations hand- 
book, we have submitted a set of the current EDA directives. EDA does not have 
an operations handbook, rather it operates on the basis of established directives, 
regulations and policy memoranda. 

Before I take any questions, I would like to introduce the other EDA officials ap- 
pearing with me today: 

David L. Mcllwain, acting deputy assistant secretary for program operations; 
Leon T. Douglas, acting deputy assistant secretary for program support; Joseph 
M. Levine, chief counsel; Edward M. Levin, acting director of congressional and 
public affairs; Vince Goodman, director, budget division; amd David F. Witschi, 
director, economic adjustment division. 
John E. Corrigan, director, Philadelphia regional office, and Steven R. Brennen, 
director, Denver regional office, will address the additional issues raised by the sub- 
committee in the letter of invitation. 

We welcome the opportunity to respond to any questions you or other members 
of the subcommittee may have. 



NOTES FROM STATEMENTS OF PRESENTERS 



Charleston, WV (April 23, 1993) 

LOUIS "duke" bloom, president, KANAWHA COUNTY COMMISSION 

The leveraging of private investment that compliments the government's invest- 
ment in infrastructure is the kind of activity that government should undertake to 
improve the economic conditions of specific regions of our nation and that of those 
people who live there. The federal government should establish broad goals and ob- 
jectives to be achieved by any funding sources that they provide. 

Local governments role should be to develop programs that achieve those goals 
that best fit the local needs and conditions. Micromanagement from national offi- 
cials in Washington and regional officials in locations such as Philadelphia inhibit 
rather than encourage innovation and creativity on the local level. The bottom line 
should be does it work, does it create jobs, does it improve the quality of life for 
a disadvantaged area and if it does than the agency should participate in funding 
the project. 

David Osborne and Ted Gaebler in their best selling book "Reinventing Govern- 
ment" said, "The closer the government is to its citizens, polls show, the more they 
trust it. The closer it is, the more accountable its officials tend to be and the more 
likely they are to handcraft solutions rather than create one-sizes-fits-all programs." 
They go on to describe an approach of challenge grants rather than categorical 
grants that they say, "* * * would create incentives for state and local govern- 
ments, but leave the job of designing and running programs in their hands. By 
using performance criteria, Washington could exercise quality control without dic- 
tating program structure and content. And by making (local) governments compete 
based on rational criteria, it would drive them toward the creation of entrepreneur- 
ial strategies." 

Governments at all levels must face the fact that solely spending money is not 
going to solve any societal problem. Governments must work with the people that 
they derive their power from and craft solutions to their problems. In Kanawha 
County for example we have undertaken two projects that will significantly impact 
upon the economic well being and quality of life of the community. One project re- 
quired a significant investment of Federal dollars and one project was completed 
with local and private investments along with citizen participation. 

The Ruthdale PSD sewer project which was completed with a $500,000 ARC grant 
along with a large EPA clean water grant and significant local contributions from 
the City of Charleston, South Charleston and The Kanawha County Commission en- 
abled the development of a 600 acre business park that will create many high qual- 
ity jobs for the region. The ARC most important contribution to this project however 
was the construction of Corridor G on wluch the property is located. 

The second project undertaken by the Kanawha County Commission was a 3 mil- 
Uon dollar water project to bring water service to 600 homes in the Eastern end of 
the county last year. This project was funded solely with local funds and private 
investment. The county developed a unique revenue bond package that it sold to a 
local bank that had pledge specific tax revenues gained from the coal mining activ- 
ity in this area for a 10 year period. The users of the service will also pay a $10 
per month surcharge on their water bills to help retire the debt and WV Water com- 
pany contributed 400,000 to the project. 

I mention these two examples to illustrate that sometimes the Federal money is 
absolutely necessary to complete a project that has a significant impact on the lives 
of the citizens and that sometimes the help is not necessary but regardless the local 
community needs to be free to craft the solution to their problems as long as they 
meet the broad goals and objectives of the federal government. 

Some specific recommendations to consider that would improve the success of any 
project are: 

(51) 



52 

(1) The mandate by the ARC to state Highway Departments that Corridors built 
with ARC funding must provide for utiUty easements at the design stage and that 
those easements must be provided free of charge to pubUc utiUties. A case in point 
was the difficulty in obtaining the necessary utility easements for the Southridge 
Center project on Corridor G. DOH officials take the position that utilities are an 
inconvenience to them and therefore they do not want utilities in the right of way. 
The purpose of the Corridor system is to promote economic development, however, 
no development can occur if there are no utilities present to developable sites. 

(2) During construction of the Corridors there are created large flat properties due 
to cut and fills that are adjacent to the Corridor. The ARC should mandate that 
those tracts of land be given to a local certified development corporation to be used 
to create industrial and commercial building sites. The state highway departments 
hold on to these tracts and will not part with them unless highly inflated prices are 
paid. That practice effectively kills the potential for new development on land that 
is "created" during construction. 

(3) Draft provisions that allow local governments the opportunity to use vision 
and imagination for future job growth. Don't hamstring governments with require- 
ments for immediate demonstrated job growth for a project to be funded. Rather 
provide guidelines that require partial repayment if the jobs do not develop over a 
ten year period or some other period that allows an opportunity for long term devel- 
opment. 

To summarize the federal government has a very vital role to play in the develop- 
ment of area of our nation that are disadvantaged. Traditionally funding from 
Washington has been used to meet many local needs, however, the method of meet- 
ing those local needs has been in a large part dictated by Washington to fill the 
requirements of the departmental regulations. Local governments are increasingly 
innovative and creative and the funding requirements need to change to keep pace 
with the development of "entrepreneurial government." 



FRANK LEE, EXEC. DIRECTOR, MASON COUNTY DEVELOPMENT AUTHORITY 

Lee considers ARC's unique partnership of local-State-Federal participation to 
fund infrastructure, technical assistance and human resource development essential 
for areas such as West Virginia. Considers W.V. blessed with active and knowledge- 
able people to administer the programs. 

Noted that, while the framework of the programs must be addressed in line with 
changing trends in economic development over the years, the importance of the 
basic legislation must be kept in mind in looking at the programs — most visible are 
highway and water and sewer improvements. Mason County with over 18% unem- 
ployment faces challenges from opposite ends of the scale — some expanding high 
wage industry, some growth of moderate wage industry, but at the same tinie dete- 
rioration of existing traditional job-based industries — and is facing outmigration and 
a shrinking tax base. Programs of ARC and EDA allow them to continue the work. 

EDA is an important player with its public works projects; and planning grants 
and special economic adjustment assistance also have been important. But technical 
assistance has potential for a larger and more important role and, along with loan 
guarantees, can be particularly helpful for development in his area. 

EDA and ARC should look hard at the high tech areas— technology is a great 
equalizer. Rural W.Va. is regularly visited by NASA representatives seeking new 
and innovative partnership to help communities develop technologies. Lee's group, 
working with others (including Marshall and Louisville Universities, General Dy- 
namics and Olin) have formed a research institute and have a contract. They have 
looked at some defense conversion programs. Problem is a doUar-for-doUar match 
is required under defense conversion and use of some Federal funds is not an eligi- 
ble match. That is a barrier for participation and will be available only to large cor- 
porations and groups already with adequate funds. Funding programs should focus 
on the merit of projects and the validity of the research to be accomplished in order 
to provide a level playing field for smaller areas with less funding capability yet the 
capacity to handle high tech. W.V. has tremendous high tech resources but needs 
the capital for technology efforts. 

Re EDA and ARC traditional roles: Often local communities have good project 
ideas to resolve problems but have to change their ideas and structure their project 
to fit certain policies and guidelines of an agency's program in order to get funded — 
i.e. a cookie-cutter approach. It is hard for local communities to be held accountable 
for projects designed from above, but they would be willing to accept full account- 
ability if permitted to pursue their own innovative ideas to fulfill their needs. 



53 

Certified economic development professionals are necessary. EDA and some other 
agencies — at Federal and State level — expend more effort to assure that a project 
meets certain criteria and guidelines of the agency's programs and the paperwork 
is letter perfect than on looking into the soundness oi a project itself based on the 
background work of a reliable expert developer. Economic developers need not be 
licensed, so anyone can claim to be one. W.V. now has a professional economic devel- 
oper who in turn hired professionals at the field level. 

Several criteria should be considered when funding projects and appropriately 
geared to needs of the area. Mason County lost out on project funding because of 
an successful public housing record — despite their high unemplojonent rate and 
need for the project. 



TERRY TAMBURINI, FOR TERRY WILLIAMS, MAYOR OF SPENCER 

(See attached letters firom Mr. Tamburini) 

Effective community development policy must be flexible, responsive, comprehen- 
sive and accountable. Projects should eliminate from local and regional level sup- 
ported by State and Federal investment in human and public infrastructure. Na- 
tional and State agencies should establish developmental standards and resources, 
but permit locals to assess their own capabilities, devise their own strategies and 
determine their own needs and projects. 

EDA and ARC programs as envisioned and implemented in the past have lost 
their vigor and imagination and have become defense and stolid. With less money 
now, programs are less effective with neater emphasis on bureaucratic expediency. 

In today's world of decentralization, EDA and ARC do have the capability to sup- 
port business and citizen involvement in meeting planning and strategy needs. How- 
ever, their roles should be identified and clarified to avoid confusion nationally and 
animosity. They are often used as scapegoats in arguments about geographical and 
societal differences. 

Local and regional development planning process should be mandated nationally 
and coordinated within States in an overall strategy setting program and States 
should be encouraged to work cooperatively. 

ARC and EDA funds should be utilized to prepare infrastructure investment and 
improvement programs and human resource projects emphasizing innovation. Appa- 
lachian Corridor concept should be expanded to include neglected areas (central and 
southern W.Va.) — to link them to potential markets. 

EDA and ARC should be pursuing technological advances in telecommunications, 
skill training, social service provision, applied manufacturing and value added en- 
terprises for rural and inner city areas. Flexibility should be incorporated into 
project plannings so that innovation is not inhibited. Housing should be viewed as 
an integral element of development planning and ARC should be encouraged to par- 
ticipate. 

Cooperation of all Federal agencies — HUD, DOT, Commerce, Labor, etc. — must be 
guaranteed and unity of purpose is essential. 

At a recent discussion whether to apply for EDA funds for a project, concern was 
expressed about the length of time it takes and the need to coordinate development 
of that strategy with preparation of other relevant physical information concerning 
the site. Past experience with EDA is that it takes a long time and probably would 
require Congressional involvement. People shouldn't have to bother Congressmen 
with these matters — people in the agencies should be more tuned to the develop- 
ment needs of local and State areas and to the capabilities at these levels and thus 
move the process along. At issue is EDA responsiveness and accountability. 

Re the question of clarifying national goals: There should be regional organiza- 
tions everywhere. As for ARC, there are parts of Appalachia that Congress should 
seek a rethinking about — i.e. programs that can address specific sections of the Re- 
gion such as the panhandle of West Virginia where the problems being faced are 
similar perhaps to those in Gary, Indiana or parts of Chicago. Whatever the geo- 
graphic development, the process and programs be estabUshed to respond to local 
needs but there could be national priorities — for example housing or health issues. 
It isn't inconceivable that ARC could wind up directing health plans. Ohio has ex- 
panded in its scope of activity. We should do it in W.V. 



JACK BURLINGAME, EXEC. DIRECTOR, JACKSON COUNTY DEVELOPMENT AUTHORITY 

Jackson is a rural county — 25,000 people. They work out of the regional council 
in Parkersburg and have benefitted from both ARC and EDA programs — the access 



54 

roads, an industrial park, major improvements on the EAV corridor (Rte. 33), and 
industrial school, several water projects and some sewer. 

Currently the Authority is involved in an EDA economic readjustment strategy 
grant — many segments to the strategy to be defined. In interviewing consultants to 
work on the programs he found some deficiencies. They could identify strengths and 
weaknesses of the programs, but were not strong on implementation plans. 

Re organization in W.Va: Burlingame pointed out that many counties do not have 
money and thus struggle for financing. Many do not have professional developers 
and without developers there is little positive activity. He urges help for those coun- 
ties — more funding from the State and from the Federal government. There has to 
be greater reliance on regional councils — but with more money. Another big need 
is for technical expertise to help with development packages — another matter which 
could be handled through regional council. 

Suggests stressing the creation of wealth — i.e. tax revenues to be enjoyed by all — 
not just "jobs, jobs, jobs". 

Flexibility is critical. Revolving loan fund programs and loan programs of other 
Federal agencies have not been effective to get a client to come in. There is a lack 
of people to do the fund programs and too much paperwork involved. Anything I 
need to get things done I get through the State organization. For the long pull, the 
loan programs should be looked at to see if the money can't be better used through 
other EDA and ARC programs. 



FRED CUTLIP, DIRECTOR, COMMUNITY DEVELOPMENT, WEST VIRGINIA DEVELOPMENT 
OFFICE (ALSO GOVERNOR'S ALTERNATE TO ARC) SPEAKING FOR DYAN BRASINGTON, DI- 
RECTOR, WVDO. 

DEBBIE PHILLIPS, EXECUTIVE DIRECTOR, PUTNAM COUNTY DEVELOPMENT AUTHORITY 
AND MEMBER OF W.V. HOUSE OF DELEGATES. 

CUTLIP. (See prepared statement attached). ARC has been 28 years in W. Virginia 
and has funded a broad range of activities including water and sewer systems, hos- 
pitals, schools, industrial parks, recreation parks, health clinics, libraries— and con- 
tinues with computer literacy, educational programs and studies. Its success, aside 
fi-om Congressional support to keep it going, is due to fact that it is governed by 
the oversight of the Governors of the States involved. The concept being that those 
closest to the problems are best able to deal with it. 

Federal programs have different requirements and guidelines. Thus, in order to 
get financial assistance, projects have to be tailored to fit a particular Agency's re- 
quirements. The beauty of ARC assistance is that it can attach itself to any one of 
a number of multiple Federal programs providing assistance. 

The problem: is that some projects fall between the cracks— they don't fit the ob- 
jectives and guidelines of another Federal program. So, at times AJRC cannot attack 
the poverty and increase the quality of life within a State because it cannot find 
a Federal program to attach itself to that can do what is needed. 

Suggestion: that the Committee review the possibility of providing the Federal Co- 
Chairman of ARC with authority to certify States agencies, currently certified by 
another Federal agency to manage a grant program, to the also manage ARC funded 
projects. For example, the W.V. Development Office has been assigned and certified 
responsibility to manage the HUD Small Cities Block Grant Program. If certified 
to do a HUD program, WVDO could do an ARC program as well. 

Problem: Some of the negative aspects of both EDA and ARC are due to the 
threat of termination of the programs. You cannot do effective strategic planning 
and long-range goal setting if under the threat of losing the programs each year and 
the continuity of funding for on-going projects. Pleased that the President has ac- 
knowledged worthiness of ARC in his budget release. 

Suggestion: The Committee is encouraged to seek authorization for the ARC pro- 
grams for a minimum of 5 years — in line with the President's plans. 

On the positive side: EDA and ARC successes are because they are grass roots 
oriented— projects come from bottom up. ARC's ability to deal with varied projects 
still exists — under the law. However, in W.V. the environmental projects of water 
and sewer have been an overwhelming priority and will probably continue in order 
to have the basic infrastructure in place to accommodate housing and economic de- 
velopment. Earlier in the program, when W.V. received $12 million annually for 
area development projects, a variety of projects tackled. Now, receiving only about 
$3 to $4 million annually for area development, the buyer power is much less th^i 
in the 1970's, so we must target funds more narrowly. The need is for higher fund- 
ing. 



55 

EDA is more bureaucratic that it should be, but it became more so over the last 
12 years and as less funds were available. Perhaps now that EDA personnel know 
they will be continued there will be greater dialogue and greater emphasis on serv- 
ice as opposed to a bureaucratic approach. 

Funding cycles are a problem. Private sector plans are based on their own criteria 
(projects of opportunity) and not necessarily in line with Government -imposed fund- 
ing cycles. This is especially a problem with EDA. Some private firms have declined 
to become involved not wanting to tie up their funds waiting for agency to move. 

Phillips. Some of the problems in working with EDA programs that might lend 
themselves to legislative amendment: 

1. Forms — they are different for each Federal agency grant program, yet they are 
requesting the same substantive information regardless of the guidelines of an agen- 
cy — such as financing, leasing arrangements, etc. If there is any way to have uni- 
form grant applications that would cover the same information requested from dif- 
ferent agencies it could save much time and money at the local levels and possibly 
at the Federal level as well. 

2. In working with EDA and Farmers Home, the people are most helpful. How- 
ever, a problem comes at the county commissioner level. Some counties have no 
money available at all and cannot meet matching share mandates either of the 
State or of Federal agencies. It would help if EDA were authorized to leverage dol- 
lars from both local and State areas as well as the private sector for partnerships 
for the location of projects in the poorer areas with high unemplojrment. (An exam- 
ple of this type of need is the Ala. Pulp and Paper project which will involve 3 
States and probably 20 coimties in W.V.) 

3. Another problem was an EDA-funded industrial park built on a flood plain and 
considerable fill was involved to raise the flood plain. In so doing, we created wet- 
lands. Corps of Engineers helped in determining what percentage was wetland and 
what percentage was not. But, EDA did not accept the definition of wetland as other 
agencies did. It is difficult — and sometimes projects are lost — to deal with different 
agencies in applying for grants and coordinating various functions with several 
agencies when there are different definitions involved. 

4. Revolving Loan Funds for small business— at the $50,000 level. Problem is with 
local match — either with banks or the city and counties involved in the partnership. 
Also, the leverage that was utiUzed — the compsiny had to come up with a 2 to 1 
match but it made it impossible to use for the companies they were working with — 
often only one or two people. The idea was good, the grant money was there, but 
it just wasn't workable in terms of the companies they we're dealing with. 

OPEN MIKE COMMEhfTS 

Re matching portions that usually are on a percentage basis: suggestion was 
made for the concept of a flexible match — adjustments based on unemplo)Tnent rate 
and/or some other criteria. 

Permit greater flexibility by EDA in some of their requirements. Example given 
was a sewer project which the developer was required to televise and provide video 
to justify some of its activity. This was a costly addition to the project. 

Question arose whether all the forms required were in fact needed and whether 
agency personnel even reviewed them in the application process. Preparing and pro- 
viding forms that stack up to 1 or 2-plus inches is time-consuming and very costly 
to those preparing applications. 

John Romano-^ee attached letter. 

Addressed the problem of ARC funding and application cycles — suggests year 
round. 

EDA has too lengthy a processing time — grant approval goes through Philadelphia 
Regional and then to Washington with too many months involved. 

RFL problems — not work all the regulatory trouble. 

Suggestions: (1) Perhaps EDA could contract out some of its work. (2) Relax Davis 
Bacon — required to use Davis Bacon or State-prevailing wages if higher. Causes 
some projects to be downsized or dropped entirely. 



TESTIMONY OF FRED CUTLIP, DIRECTOR, COMMUNITY DEVELOPMENT DIVISION, WEST 
VIRGINL\ DEVELOPMENT OFFICE, AND STATE ALTERNATE 

Twenty-eight years of service to the State. 

Provided immense improvements throughout the State of West Virginia in such 
things as roads, hospitals, Ubraries, schools, parks, industrial parks, airports. 



56 

Continuing to provide programs in computer literacy training, various educational 

t)rograms, studies from the commission, and planning projects that deal with prob- 
ems common in Appalachia. 

The key to ARC/s success is the fact that you, Congressman Wise, and others of 
yovu* persuasion, have given the oversight and support necessary to keep the Com- 
mission operative. That effort provided by our congressional delegation and by the 
Governor of the State who serves as a member of the Commission has been the de- 
termining factor, in why this Commission has continued over the years. 

There is a recognition in the way the Commission operates that those closest to 
the problems have a better perspective on how to deal with them. 

The Commission provides a broad diversity of programs. It can attack many types 
of problems with which we are faced. 

We lost revenue sharing, we got New Federalism. They are not the same. 

The HUD program is full of guidelines, and its objectives are different from those 
established by ARC. Although it goes a long way in meeting a lot of needs, it is a 
most difficult program to manage. Which brings me to one of the issues that I would 
like your committee to consider. 

That issue is the possibility of legislation enabling the Federal co-chairman to au- 
thorize a State agency or regional planning and development council to actually 
manage grants made by the Commission. 

We feel this is necessary because there are a number of problem areas that we 
cannot deal with because they do not readily fit the requirements of other pro- 
grams — for instance, the Farmers Home Administration or EDA or a HUD require- 
ment. They fall somewhere between all three of those programs. 

I am suggesting that the States have developed grant management expertise, and 
if an agency is certified by HUD to be capable of managing a HUD grant, we would 
like to thinJc that we could manage an ARC grant equally as well. So we would en- 
courage the committee to take a look at the possibility of enabling ARC to certify 
certain State agencies as having the capability to manage ARC dollars. 

You asked about negative issues relative with the Commission. I think the biggest 
problem has been the fact that ARC is operating under continuing budget exten- 
sions. 

We would recommend reauthorization of the program at least through the next 
five years. That authorization and a continuity in a level of funding will enable stra- 
tegic planning in investments. The absence of a continuing program and the fear 
of phase-out year after year does not provide for professional management of such 
an important program. 

Both EDA and ARC are successful because they pay attention to grassroots 

froiects. They have both been through the trials and tribulations suffered by the 
eoeral program. Both support local issues and development of ways to solve prob- 
lems at the local level. 

I personally feel that the EDA program is a little more bureaucratic than it 
should be. I think that this is a result of direction given over the last twelve years 
to the program, and I feel that if it is reauthorized for at least a five year period 
and given the resources it needs, that it will function differently under new leader- 
ship. 

Id like to close. Congressman Wise, by applauding you for your strong support 
for the Appalachian Regional Commission and for the Economic Development Ad- 
ministration over the years, and your continued interest in refining these organiza- 
tions so that they may better serve the needs of the people of the State of West Vir- 
ginia and the Appalachian Region. 



Regional Intergovernmental Council, 

Dunbar, WV, May 3, 1993. 

Congressman BOB WiSE, 
Rayburn House Office Building, 
Washington, DC. 

Dear Congressman Wise: I am writing this to be included with the testimony 
given at the April 23 public hearing you conducted at the Kanawha County Court- 
house, as Chairman of the House Public Works and Transportation Committee, Sub- 
committee on Economic Development. I had provided some of my comments to your 
Congressional Staff (Lucille Morgan, Marti Downie, Lee Godown, and Carl Lorenz) 
in a one-hour meeting on April 22. 

My own background with EDA/ARC: I have been a RIC staff member for over 16 
years and twice served 1-year terms as Executive Director of the Putneim County 
Development Authority (FY-87 and FY-90). The Putnam County Development Au- 



57 

thority had constructed two industrial parks with EDA funds: Rock Branch in the 
1970's; and Eleanor in the late 1980'8. 

RIC is recognized as a four-county Economic Development District by EDA and 
as a Local Development District by ARC. We receive planning funds from both these 
agencies to put together a Regional Development Plan and an Overall Economic De- 
velopment Program. The planning funds enable us to provide technical assistance 
to our member governments (e.g., to develop applications for federal assistance on 
public works projects). The funds also enable us to work with numerous federal, 
state, and local agencies — public and private sector — to promote community and eco- 
nomic development in our region. I believe that RIC has played an active role in 
regional development for the past 2 decades, thanks in part to EDA/ARC support. 
In your April 23 Hearing, three of the speakers (a county commissioner, mayor, and 
director of a County Development Authority) mentioned RIC's involvement in past 
projects, an indication that we cooperate in regional development. I recommend that 
EDA and ARC continue funding their District programs. 

I also believe the EDA University Center program is a worthwhile and effective 
mechanism to support economic development. Before the University Center program 
began, it was a difficult and time-consuming process to obtain an EDA technical as- 
sistance grant (for a feasibility study, etc.). The University Centers bring the pro- 
gram closer to home and expedite the application process. The University Centers 
at Marshall University and WV Institute of Technology have been quick to respond 
to our requests for technical assistance. The Tech Center has flinded three projects 
in our region in the past year, and is presently considering other projects. The Uni- 
versity Center at Marshall University is currently working with our staff to develop 
projects in Clay County (manufacturing of products and marketing of arts and 
crafts). 

ARC program 

The ARC supplemental grants have always been a useful tool for completing a 
project's funding package. ARC provides the funds, then turns the administration 
over to another agency. This is beneficial since it eliminates conflicts between two 
federal agencies administering grants for the same project. At present, ARC does 
not allow Local Development Districts (regional planning and development councils) 
to administer ARC funds. I recommend that ARC allow these agencies to do grant 
administration in the future. 

ARC deadlines 

The once-a-year acceptance and award of applications is a hindrance to working 
with private business development. For example, if a project is ready to go in the 
private sector during the Winter or Spring of the year, waiting for the ARC cycle 
to begin (application deadlines, Oct. 1) is often not feasible. I would recommend hav- 
ing a quarterly application and award deadline, in particular for the Economic and 
Community Development program. 

EDA programs and process 

EDA uses a profile/pre-application/fuU application process which has advantages. 
It eUminates the need for a large amount of paperwork and certifications up-front 
in the application process. The profile is a brief project description and budget; if 
approved, the pre-application is submitted; if that is approved, a full application is 
prepared. 

EDA jobs criterion 

EDA Title I grants are determined in part by the number of jobs estimated to be 
created/saved by the EDA investment. I recommend a re-evaluation of the jobs for- 
mula to ensure that it reflects the realities of present-day, private-sector invest- 
ments. I am not suggesting that EDA eliminate jobs as a measure of project success. 
However, the agency may want to re-define its formula, based on a project's impact 
on the economy over the long-term. It is seldom that a manufacturing company will 
start up or expand in this area with 100 (+) new jobs. 

EDA application review process 

In the past several years, EDA has taken too long to review projects. The review 
process could easily be shortened by eliminating the need for EDA's D.C. office to 
participate. As it presently happens, EDA's regional office in Philadelphia reviews 
the project and works with the applicant to make corrections; after the regional of- 
fice approves the application, it forwards the paperwork to D.C. for another review 
period. I suggest that this duplication of review be eliminated. 



58 

EDA funding 

When a project is bid and the lowest bid is higher than the committed funding, 
EDA will not participate in funding the overbid. I believe that the agency should 
evaluate projects on a case-by-case basis, and have the authority to participate in 
funding a share of an overrun. 

EDA grant administration 

The EDA Regional Office should have the authority to make decisions on the 
grant administration (such as time extensions, etc.). Often times, a project is de- 
layed while wsiiting for the D.C. office to give its approval. 

Also on grant acuninistration, the Putnam County Development Authority experi- 
enced unnecessary difficulty in closing out its EDA grant for the Eleanor Industrial 
Park in 1989-90. The Authority Director and Chairman had tried without success 
to close the project. When I became Director of the Authority, it took me months 
more to find out exactly what docimients EDA required for the closing. I had the 
idea that EDA personnel were in no hurry, and the grantee had no mechanism for 
inducing EDA to be responsive. 

This 18 a small example, but it indicates a problem in structure: how does the 
grantee deal with a federal agency when the agency causes the delays? The grantee 
does not have equal footing with the grantor. 

EDA's RLE program 

Our agency experienced problems in administering an EDA Revolving Loan Fund. 
The Davis-Bacon wages requirement in construction activities often caused potential 
borrowers to look for other funding sources. The Davis-Bacon requirement increases 
the cost of construction; and small businesses, in particular, object to that require- 
ment. 

Charleston area banks did not refer marginal borrowers — or any borrowers — to 
our RLF. We did not wish to compete with the private banking community, only 
supplement its activities. We let the banks know of our program, but received no 
referrals, calls, or requests fi-om banks. 

The majority of requested loans to use were for working capital. Our RLF Admin- 
istrative Plan limited working capital loans to 15% of our portfolio. 

Our main problem — ^not the fault of EDA in emy way — ^was our inability to obtain 
the 25% local match for the federal dollars in the RLF. We had trouble obtaining 
local fvinds firom our member governments; we also unsuccessfully tried — ^with the 
assistance of two private-sector development agencies — to get the local share from 
area banks. If we attempt another RLF in future years, we will have local funds 
committed (and in our RIG account) prior to getting federal dollars. 

Conclusion 

EDA and ARC have funded many projects and programs in our Region (Boone- 
Clay-Kanawha and Putnam counties, wV), and they have had a tremendous bene- 
ficial impact on the economy. This letter does not include all the positive contribu- 
tions of EDA-ARC. The programs have been worthwhile; they have been effective; 
they have been appreciated. As I told your staff at our April 22 meeting, Appalach- 
ian Corridor G is already a megor economic development project for this area, and 
its total impact has not yet been determined. That Corridor — funded bv ARC— has 
opened up opportunities that were not possible a decade ago. I believe that Corridor 
G symbolizes what ARC (and EDA) are all about: making things happen, increasing 
accessibility, actufdizing the potential. 

Thank you for the chance to comment on EDA-ARC programs. Please call me if 
any of these points need clarification. 
Sincerely, 

John Romano. 



Department of Development, Cmr of Parkersburg, 

Parkersburg, WV, April 26. 1993. 

Hon. Bob Wise, 

House of Representatives, Longworth House Office Building, 

Washington, DC. 

Dear Congressman Wise: I have been thinking about your request that we give 
some thought to the future of the Appalachian Regional Commission. The premise, 
I am sure, is the fact that over time many have oeen both jealous of the success 
of the program and the resources directed to it, curious as to the geographic limita- 
tions of the program, and envious of the powerful congressmen who have protected 
the ARC and secured its longevity. I believe the ARC has proven itself over the long 



59 

term to be a flexible, responsible and accountable organization — the quintessential 
example of the new federal partnership. I also believe it is a timeless concept. 

I would respectfully suggest that the shotgun approach adopted by the ARC in 
order to secure its survival be modified to a rifle shot concept. I would similarly 
agree that the geographic boundaries of the Commission be reviewed not so as to 
limit participation out to guarantee pro-am innovation and imagination. By this 
latter statement I'm implying that funding decisions be tied more directly to real 
developmental strategies. For example, if the City of Pittsburgh applies for ARC 
funds, the investment should be tied to a regional or bi-state benefit. Similarly, 
within Pittsburgh or Charleston, ARC funds could be targeted to innovative ap- 
proaches to health care or skill training within inner-city neighborhoods. At the 
State level, ARC funds could be utilized to help communities explore organizational 
and strategic alternatives such as technology transfer enterprise institutes, commu- 
nity development corporations, innovative housing options, and applied research. 
States could also be rewarded for developing their own infrastructure initiatives. 
ARC, in short, should get back to what it does best — develop grassroots organiza- 
tions, encourage developmental strategies, supplement other federal grants, and ad- 
vocate consistently for the disadvantaged and distressed. The idea of moving into 
the impoverished areas of Missouri, Oklahoma, east Texas, Arkansas and Louisiana 
is reasonable as well as the areas of upper Michigan, Maine and Minnesota. Just 
change the name and make the agency the vanguard for sensitive and sensible 
structural responses to both acute and chronic economic and community malaise. 

The EDA, on the contrary and by way of comparison, should become institutional- 
ized as the long-term while for economic development the provider of major re- 
sources and the catalyst for significant long-term change. 

It is to the EDA that we should turn for major resource infusions, the industrial 
complexes and their buildings, the applied technical centers wherein ARC funded 
training initiatives are conducted, the rural and inner-city hospitals where ARC 
funded equipment is utilized. 

The ARC and EDA are remarkable examples of governmental survival, tenacity 
and adaptation. Their presence currently does not guarantee their future existence, 
but their current role and the debate engendered by these programs should assure 
that they be given the opportunity to continue their adaptation and positive con- 
tribution. 

Thank you for your attention to your people. 
Respectfully, 

Terry Tamburini, 
Development Director. 



Department of Development, City of Parkersburg, 

Parkershurg, WV, April 23, 1993. 
Hon. Bob Wise, 

House of Representatives, Longworth House Office Building, 
Washington, DC. 

Dear Congressman Wise: Our personal conviction is that for community and eco- 
nomic development policy to be effective it must be flexible, responsive, comprehen- 
sive, and accountable. In order to satisfactorily address these requirements it is es- 
sential that programs emanate from local and regional constituencies supported by 
a national-state commitment to investment in human and public infrastructure. It 
is necessary that national and state authority establish developmental standards 
and provide requisite resources, but it is imperative that each community and group 
of communities be permitted to assess their own strengths and weaknesses, analyze 
their own potentials, devise their own strategies and pursue implementation of their 
own development plans. The EDA and ARC programs were established to become 
the vehicle for the transfer of developmental processes from the federal to the state 
and local units of government. 

This experiment in developmental organization was hailed when there was ample 
money to effect a difference. Of late, with the diminishing financial resources, the 
programs have lost their vigor and imagination and have become Uttle more than 
categorical grant programs devoid of process and isolated fi-om any recognized strat- 
egy setting program. 

This general lack of effectiveness has characterized the short term society of 
which we are a part where investment m thoughtful community organization and 
advocacy has been replaced by a tendency to emphasize bureaucratic expediency. 
The ARC and EDA represented grand experiments in the evaluation of the devel- 
opmental planning process. They were probably, in the sixties, ahead of their time. 



60 

Now, with the emphasis on business and governmental decentralization, citizen in- 
volvement, and the establishment of the speciaUzed and competitive community 
penning process, the ARC and EDA should be appropriate delivery systems. They 
have that unique capability. 

My advice with regard to the ARC and EDA are that their respective roles be 
identified and clarified. There is a great deal of confusion and some animosity. The 
agencies are often used as scapegoats in arguments relative to geographic and soci- 
etal differences. Arguments such as this tend to antagonize and polarize rather than 
bring cohesiveness and integrity. Local and regional developmental planning proc- 
esses should be mandated nationally and coordinated within a state overall strategy 
setting prograun; states should be encouraged to work cooperatively rather than look 
inwardly. ARC and EDA funds should be utilized to prepare comprehensive infra- 
structure improvement and investment programs and human resource packages 
which accent innovation, risk and imagination. The Appalachian Corridor highway 
concept should be expanded to include neglected areas such as central and southern 
West Virginia and to link disadvantaged potential markets to more highly developed 
areas. State Development Plans should be composed of vigorous and living regional 
strategies rather than dry recitations of static information. A synthesis of urban and 
rural areas should be effected with relationships defined and linkages reinforced. 
The EDA and ARC should be pursuing technological advances in the areas of tele- 
communications, skill training, social service provision, applied manufacturing tech- 
niques, and value added labor intensive enterprises for rural and inner city areas. 

The ARC and EDA need a jump start. Together they comprise a structure capable 
of helping to reinvigorate the process and substance of U.S. developmental policy. 
They have become somewhat defensive, lethargic and stolid. Renewed enthusiasm 
is necessary. 

It would not take much fine tuning to redirect the agencies' efforts and renew the 
commitment to change. States and regions should be encouraged to devise aggres- 
sive, forward-looking plans and they should be rewarded for doing so. Flexibility 
should be incorporated into project planning so that innovation is not inhibited. 
Housing initiatives should be viewed as integral elements of economic and commu- 
nity development, and ARC should be encouraged to participate as they once did. 

The cooperation of all federal agencies in the developmental process, whether it 
be commerce, labor, HUD, DOT, HHS, or Ed, must be guaranteed. Unity of purpose 
is essential, and comprehensiveness of thought is imperative. 

One of the most difficult policy decisions facing jurisdictions with scarce resources 
is whether to concentrate capital in areas of economic strength in hopes that bene- 
fits will eventually accrue to less advantaged neighborhoods or communities or to 
directly invest in less positively endowed areas in hopes that eventually employment 
and investment opportunities will germinate. Traditionally, ARC and EDA initially 
chose the growth unto course; of late, they have been more direct in their advocacy 
of the distressed and depressed areas. There are a variety of names which have 
been given over time to the vjirious theories which governed economic development 
processes. These theories smacked of an atmosphere which defined development in 
terms of black and white. Now contemporary America requires a more relevant pro- 
gram, one that builds quality jobs compatible with community values, one that cre- 
ates new and vigorous economic institutions, one that builds competitive advantage 
based upon a quality environment and one that utilizes knowledge and innovation 
as economic generators. These are not black and white issues. They require thought, 
compromise, and negotiation. 

The ARC and EDA programs, if effectively reconstructed and revitalized, can be 
the catalysts for change. 
Respectfully, 

Terry Tamburini, 
Development Director. 



Elkins, WV (April 23, 1993) 

dr. abbott brayton, v.p. gov't. relations, davis & elkins college 

Looking at both EDA and ARC, would encourage a two-fold approach: 

The first recognizes there simply isn't enough money to do the things that need 

to be done — ^with fiscal problems and deficit crisis. So, when the necessary cutbacks 

are being made in Federal budget, don't cut the areas that are investment areas 

in our basic economic infrastructure. EDA and ARC are two absolutely critical agen- 



61 

Second, relates to problems with the top-down administration in Washington. 
Washington can't possibly know what the needs are locally. Flexibility is needed. To 
have to fit a program into a given set of Federal guidelines that often don't meet 
the requirements doesn't make much sense. Programs should be judged on their 
merits and funded sufficiently in order to do the job well. 

Also, simplification of the application process for most Federal programs is essen- 
tial. Giant sized grant applications consisting of 200 to 300 pages is inefficient. 
0MB would possibly be the best source to redesign a form and provide for uniform- 
ity among the various agencies and departments. 

CHARLES FRffiDLE, ECONOMIC DEVELOPMENT SPECIALIST, MONONGAHELA POWER CO. 

Friddle is currently President of the W. Va. Economic Development Council and 
serves on the Governor's Council for Community and Economic Development. 

He emphasized the favorable impact of ARC in the rural counties of W. Va. 

Suggestion re use of the funds: years ago, funds were aside in W. Va. for com- 
prehensive planning. In W. Va. we have reached a critical time in our development, 
particularly with growth and expansion of business coming from east to west out 
of Washington and Baltimore. We are unprepared to handle that growth, particu- 
larly in terms of planning. There aren't enough dollars to do those necessary things 
yet now is the time to be doing it. 



FRANK MOOTS, DIRECTOR, UPSHUR COUNTY DEVELOPMENT AUTHORITY 

These comments are made in behalf of the Upshur County Development Authority 
(U.C.D.A.), Chamber of Commerce and the citizens of Upshur County. 

Prior to the EDA and ARC, Upshur Count^s water and sewage services were lim- 
ited to the City of Buckhannon and vicinity. The water and treatment plants were 
small and inefficient. In the early 80's they were at maximum usage level. Three 
major companies were at stake, due to the water limitation, the companies could 
not expand their operation in our County. Also, new companies could not be served 
due to the inadequate systems. The results were loss of jobs for the area. 

In 1982 the County received a $340,000 Grant to upgrade the water supply Dam. 
In 1982 the City of Buckhannon received a $2 million grant to build a new water 
and sewage plant and upgrade both systems, and a one million dollar EDA Grant 
to complete a distribution system to service the Hodgesville, Tennerton, and other 
small towns in the County. Today, we have over 6,000 households with public water, 
2,500 households without public water, public sewage is available to 3,800 house- 
holds, over 5,000 households are without sewage services. 

Currently, Buckhannon water and sewage usage is just over the 50% level. The 
available water and sewage capacity has enabled us to invite new companies to take 
a look at our area for possible plant sites. We are in the final stages of negotiation 
with a major firm to build a wood product plant that will produce several hundred 
jobs. These are some of the good things that has happened to our County, thanks 
to EDA and ARC. 

The job is not complete, there is a need to extend these services to excellent plant 
sites and to the other 5,000 households needing the water and/or sewage. 

Needless to say these programs have been underfunded the past 12 years. 

The short comings are as follows: 

1. To many steps, pre-application process, invitation to complete formal applica- 
tion, review additional information, etc. Turn around time to long. 

2. Bird in the hand theory, need to have committed jobs to get services to a site. 

3. No planning fvinds. 

4. Project requirement may give you something different or more than you need 
to get the job done. 

Conclusion: The EDA, ARC and the new Robert C. Byrd Highway, linking Upshur 
County with 1-79 has opened the door to allow Upshur to grow and double it's job 
base and population in the next ten years. 

Recommendation: 

1. That the EDA and ARC be reauthorized. 

2. That the paper work be reduced. 

3. That the guide lines be more flexible. 

4. That the EDA and ARC be funded at the level to ensure that both agencies 
will serve their purpose and needs of the area. 



62 

ROGER MCMAHON, PRES., RANDOLPH DEVELOPMENT AUTHORITY 

EDA gave Randolph County the opportunity to build a business incubator facility, 
a training institute. Construction is to be finished in May with the dedication in 
July. 

But, an EDA grant application is a horror — a 3V2" file. Since many people prepar- 
ing these are volunteers, they have no time to do the work. They get help from peo- 
ple of Region VII. 

EDA programs should be more 'user friendly' and easier to deal with the require- 
ments and guidelines. 

Look at matching funds — local areas cannot always meet the levels required to 
put a package together. 

ARC is now also coming in with grant assistance. Both EDA and ARC must con- 
tinue. 

Mc Mahon later addressed the problem of Chessie RR abandoning tracks. There 
is a light rail operator tr)dng to buy trackage. Without rails the area will lose busi- 
ness. Possibly some money will be available is ISTEA — at present they are negotiat- 
ing the Chessie to reduce costs. 

MS. HAY, HAMPSHIRE COUNTY 

Spoke about the successes of and need for the EDA program: 

In 1989 a Kinney Shoe Plant company, located in the industrial part in Romney, 
closed its doors. Some 435 jobs were lost, close to 6% of the county's workforce. The 
Region VII Planning and Development Council gave help. A proposal and applica- 
tion with a recovery strategy was submitted to EDA who committed funds to the 
project. In 1990 the strategy was completed which included a project for a multi- 
facility project including an incubator facility to be in the industrial part — a 25,000 
sq. foot facility. Hampshire County received $600,000 of EDA money and matching 
funds were $200,000. As a rural county such a project could never have been done 
without EDA help. The incubator is going well, there is much interest, and the 
County and area are now working toward a goal of funding their own development. 



RICHARD WOOD, REGION VI PLANNING AND DEVELOPMENT COUNCIL 

The Council plays a unique role — designated as a LDD under ARC and as an 
EDD under EDA. All the funding from EDA and ARC goes through the Council. 
Specific suggestions for improvement: 

1. Planning monies are very important and are needed to put together a grant 
application for EDA and ARC. Funds have declined since 1980 — but they are need- 
ed. If there were increased funds, certain areas are in critical need of a better ef- 
fort — land use is one area, to prepare for expected growth in the area, and the basic 
tools for land use planning or GIS (Graphic Information Systems). Also more per- 
sonnel are needed. The role of planning districts in rural America is important. 
Cities have more access to block grant urban monies for this purpose. EDA and ARC 
funding is the only sources for infrastructure for rural areas. 

2. Application process: it has become cumulative as the programs have aged. This 
year there is a new form with a question about munitions on site. Perhaps there 
could be a certification process with criteria listed that must be met in order to 
qualify. This would avoid the need for providing considerable documentation and it 
shifts the burden from EDA to the applicant. It saves EDA time and simplifies the 
application process. 

3. Timeliness through Regional Office is another problem — ^which could be eased 
with more staff. But that may come. 

4. Legal is a problem. After going through the process with Regional counsel, then 
it goes to Washington legal and everything has to start all over again. It doesn't 
appear that Counsel is accountable to the Regional head — but only to themselves. 
Granted they have the role of protecting EDA and making sure things are correct — 
but often it seems excessive. 

5. Technical Assistance — an excellent program. Many good reports have come out 
of TA over the years which have provided good examples that can be helpful from 
one place to another. Needs more funding — ^very beneficial. 

6. Re possible future LPW program. Wood encourages looking at the timing for 
use of project money if such a program comes out. The 90-day window makes it im- 
possible to put together quality projects unless they are already designed, on the 
shelf and ready to go. By time design is done and then advertising for oids and the 
bidding process, it takes more than 90 days. In addition, the State approval process 
extends the process to more than 90 days. 



63 

7. ARC funding is still needed. Much progress has been made — highways alone 
can justify its existence. 

This area of W. Va. is looking to some promising developments, but at present 
unemployment is nmning about 19%. Both ARC and EDA grants, received and 
those in the works, are helping to provide for critically needed projects to go along 
the 1-79 corridor. But the area alone, without outside Federal nnancial help, could 
never have accomplished any of this — even though there was local match. 

Most projects are leveraged at least 50% — many more than that — but if locals 
must come up with the other 50%, many projects won't get built. 

Planning grant monies are critical to development councils. Without planning 
money there would be no staff to do the EDA and ARC projects. 

An approach that could expedite projects and ^ve more flexibility would be to 
take a portion of the funds and allocate then to LDD's and EDD's. Not an unprece- 
dented idea — Pennsylvania has organized its districts in such a fashion. Washington 
would no doubt want some sort of check, however, it could be similar to the Title 
K RLFs — they could be certified and then meet a series of guidelines in planning 
and projects and be responsible for diwyine up monies for local communities. 

Re uniformity of forms. If it could be pulled off— at least maybe for agencies with- 
in one department, such as within the Department of Commerce — there could be 
one form for handUng environmental issues and other various things required. The 
questions are basically the same so it is time-consuming and expensive to handle 
several different forms to go to different agencies. 

Perhaps also there could be a consolidation of programs — again, not necessarily 
between departments. It would probably be easier with agencies within one depart- 
ment. 



MS. BEKKI LEIGH, REGION VII PLANNING AND DEVELOPMENT COUNCIL 

Major problems: 

The lack of sufficient ARC funds — $1.5 million for distressed counties in W. Va. 
just isn't enough. 

Lack of flexibility within ARC and EDA regulations. 

With EDA, the back and forth of the application process — to Philadelphia, then 
to Washington, then back to Philadelphia — and the number of "wrinkles' to be dealt 
with can take as long as 2 years firom initiating the appUcation process to funding 
and construction. If the private sector is involved the situation can become impos- 
sible. Decentralization and regional authority are needed. 

Concerning Corridor H — ^there are communities that will be affected that have no 
resources for planning and preparing for the coming of the corridor. There is no zon- 
ing, no land use plans and no staff or expertise to get the work done. Greater help 
is needed here. 

Projects can happen with EDA help — $12 million funded by EDA, matched by 
local money of $8.5 million — this is what makes projects go. 



JIMMY HAMMOND, MAYOR OF ELKINS 

He was newly elected as Mayor when the letter of invitation about the hearing 
came. Being unfamiUar with the EDA and ARC programs, he talked with others 
who knew more and now considers the programs are important and needed. He is 
hopeful that the process for dealing with the agencies can be made easier and 
brought down to a level where it would be possible for a small business person to 
get help. 



CLIFFORD SUMMERS, FORMER STATE LEGISLATOR, PRESIDENT UPSHUR COUNTY 

TAXPAYERS ASSOC. 

Acknowledges the State's funding needs. However, would like to see the State do 
more to work out a way to produce its own funding. 

Believes that W. Va. won't be able to encourage business from outside into the 
State unless something is done about the high number of annual bankruptcies, the 
outmigration and the number of firms going out of business. The State must solve 
many problems — the regulations connected with Corridor H; the wetlands; the fact 
that two-thirds of college graduates have to leave the State to get adequate jobs. 
Believes the State has many resources eind positive things that should be working 
for them — enough coal for 30 years (what new industries can be developed utilizing 
the coal resources); plenty of hardwood timber; more gas wells than any other State; 



64 

proximity to States with about one-half the Nation's population. West Vireinians 
must ask selves: Why are we still so poor? Must look at what the costs of production 
are and why, what the tax situation is, waste in government, and what can be done 
to make the State more attractive for development. j 



LOUIS J. VAN GILDER, BUCKHANNON, BOARD MEMBER FAIRDALE, INC. (PROPOSED 
RETIREMENT CENTER IN BUCKHANNON) 

Van Gilder is a member of the Economic Transformation Committee with the W. 
Va. Conference of the United Methodist Church. Also Treasurer and member of the 
Board of Directors of Information & Referral Crosslines— a charitable organization, - 
ecumenical — a job related group. t ,01 ^ 

Attention should be addressed to preventive measures. Louis Glass Co. employees 
are on strike (some 300 plus). The company is threatening to move the plant out 
of the covmtry if employees don't accept the company contract. Many of the employ- 
ees are working with Crosslines. Hopeful that EDA or ARC can help in this connec- 
tion. 

The Economic Transformation Committee recently distributed a book entitled "Ap- 
palachian Signs of Hope" — ^will send a copy. 

EDA and ARC have been a big boost to Upshur County. But, with so many people 
out of work, ARC and EDA need to direct more attention to the need for jobs. While 
projects must come from the bottom up, we do need cooperation of Federal govern- 
ment, not the control of government. 

Re the Fairdale, Inc. proposed retirement community: it needs a grsmt of 
$150,000, then they can go on to banks and Farmers Home. The Center will employ 
about 95 people when completed. 

OPEN MIKE COMMENT 

There could perhaps be developed a one-stop, computer generated clearinghouse 
network available at the State or regional levels with all the programs listed. If data 
could be brought up onto the screen by using key words to identify the types of pro- 
grams — and related programs — and then under which agency, and the forms need- 
ed, what funds are available, etc. it would be helpful and things could move faster. 
Though there is a catalog— it isn't as handy as a computer set up could be. 

Since 1972 the Region 8 Planning and Development Council has worked with 
EDA and ARC to meet the economic and community development needs of Grant, 
Hampshire, Hardy, Mineral and Pendleton Counties. Resources from these agencies 
have been essential in increasing employment opportunities and in the developing 
infi-astructure required for sound communities and economic growth. Direct and in- 
direct investments by EDA and ARC have added almost 10,000,000 gallons a day 
to the region's water treatment capacity and over 3,000,000 a day to the regions 
ability to provide secondary sewer treatment. These agencies have assisted in the 
development 7 industrial parks that currently support almost 1,700 manufacturing 
jobs. 'This experience is not unique to Region 8; Table 1 presents the results of a 
recent survey that indicates that approximately 63 prcent of the State's industrial 
parks have been developed with assistance from EDA and ARC. 

EDA and ARC have long assisted in the development of water and sewer systems. 
These systems have increased the acreage available for industrial development and 
in many instances have been a direct requirement for industrial growth. As a recent 
example, WLR Foods in 1990 announced the desire to double the capacity of its 
Moorefield poultry processing plant. The WLR project called for the creation of 800 
jobs and a private investment of over $60,000,000. The expansion project hinged on 
the ability of the Town of Moorefield (population 2,148 persons) to double its water 
treatment capacity. The required water improvement project was estimated to cost 
$3,400,000. Although the job benefit would occur across a more than five county 
area, the Town of Moorefield was entirely at risk for the required public utility in- 
vestment. The Town simply could not bear this level of risk without assistance. 
Project packaging by the Regional Council resulted in an EDA grant of $1,250,000 
and a Small Cities Block Grant of $750,000. This grant assistance allowed the Town 
to borrow $1,400,000 from the West Virginia Water Development Authority. The 
project is nearing completion and WLR Foods has virtually reached its employment 
goal. Additionally, msgor commercial ventures have been undertaken that brings 
total job creation to over 1,000 positions. 

EDA investments in the 1970s and 1980s resulted in decreasing unemployment 
rates within the region and narrowing of the gap between the region's average wage 
and the national average. Unfortunately, the recent recession has undone many of 



65 

the gains. Moreover basic changes in the national economy have created a new se- 
ries of problems. The movement of low skill manufacturing jobs to plants abroad, 
changes in production methodologies that have maintained production levels while 
decreasing employment and, defense related industrial adjustments have displaced 
many workers from jobs that they have long held. The Economic Development Ad- 
ministration has had the flexibility to assist with meeting challenges. EDA re- 
sources have been provided to: 

Hampshire County to address the closing of the Kinney Shoe Plant. The plant 
closed as result of a corporate decision to manufacture its product overseas. EDA 
resources developed a recovery strategy and funded the construction of multi-tenant 
industrial building. 

Grant County to address chsinges in mining where production changes have al- 
lowed coal mines to maintain high production levels with only a fraction of previous 
employment. Again EDA resources developed a recovery strategy and EDA will soon 
give consideration to funding of an industrial park. 

Mineral County to address downsizing by Hercules, a mmor defense contractor 
that operates the Navjr's Allegany Ballistics Laboratory. EDA resources are cur- 
rently being used to identify an approach to creating replacement jobs for previous 
defense workers. 

EDA has a demonstrated ability to respond to these localized impacts of the na- 
tion's changing economy. 

EDA and ARC have been instrumental in supporting economic and community 
growth. These agencies have provided the resources that have fueled job creation 
and the development of sound communities. Investments by these agencies have 
over the long term been cost effective. Increases in employment and wages and the 
development of sound communities have lowered the need for other forms of federal 
assistance. These programs have been at the forefront of creating opportunities for 
disadvantaged persons that allow these individuals to become productive citizens. 
EDA and ARC are deserving of continued support. 

Given their positive impact, if EDA and ARC have any major deficiency, it is their 
wholly inadequate level of funding. Much has been written of previous presidential 
efforts to reduce the national deficit at the expense of programs benefiting rural 
areas. Nowhere has this been more evident than in the level of funding for EDA 
and ARC for the previous decade. Real problems continue to exist in rural America. 
Examples of these problems are readily evident and include: 

Despite an industrial recruitment effort that has created over 400 jobs since 1985, 
Grant County continues to suffer from double digit unemployment. Simply put, a 
small county such as Grant has no ability to deal with national economic changes 
without external assistance. 

That one cannot drive through Mechanicsburg Gap on U.S. Route 50 in Hamp- 
shire County without observing someone filling containers with water from a spring 
that is clearly posted as unsafe for consumption. Obviously, basic infrastructure is 
still needed in rural areas. 

Both EDA and ARC should be encouraged to move away from policies that were 
adopted in the early 1980s as a response to criticism from an unfriendly presidential 
administration. These policies reduced the agencies' ability to assist those counties 
with the most extreme levels of distress, or established a single test (most often the 
level of unemplo5rment) that ignored other conditions of distress. While it must be 
recognized that the national deficit will prevent funding levels from ever being ade- 
quate and that some funding criteria must exist, the criteria should allow for a flexi- 
ble response across a range of conditions. 

In summation, EDA and ARC should be seen as primary tools in the nation's ef- 
fort to revitalize rural America. 

TABLE I.— WEST VIRGINIA INDUSTRIAL PARKS 

Total industrial patfcs Industrial parks as- i„rf„cfri>i hniin 
sisted by regional coun- Industrial parVs il"; ' ' "ri?" Industrial build- 
Region cils under develop- hi rfpfonai ings under de- 
Number Acreage menf rnnnrik velopmenf 



Acreage 



1 7 735 4 581 1 

2 2 175 2 175 2 

3 12 1,129 3 147 1 

4 5 204 204 

5 7 480 5 340 18 

6 7 794 5 313 3 

7 5 220 2 220 1 



66 

TABLE I.— WEST VIRGINIA INDUSTRIAL PARKS— Continued 





Region 


Total industrial parks 
Number Acreage 


Industrial parlis as- 
sisted by regional coun- 
cils 


Industrial parks 
under develop- 
ment 


Industrial build- 
ings assisted 
by regional 
councils 


Industrial build- 
ings under de- 
velopment 




Number 


Acreage 


8 




6 


423 

772 

97 


6 
6 
4 
1 


423 

672 

97 


2 

I 
1 


2 

1 

3 


2 


9 

10... 
11 ... 


Total 


7 
4 
1 


















63 


5,029 


38 


3,172 


6 


29 


3 



Region VII Planning and Development Council, 

Buckhannon, WV, April 23, 1993. 

Hon. Bob Wise, 

House of Representatives, Ray burn House Office Building, 

Washington, DC. 

Dear Mr. Wise: We are pleased to respond to your request to offer thoughts on 
how EDA and ARC procedures can be improved. The effectiveness of both agencies 
is badly hampered by overregulation and lack of funds. While I am sure our com- 
ments will not surprise you, we appreciate your efforts to incorporate our input. 

In the case of funds available through ARC, 1.5 million dollars for the 29 dis- 
tressed counties in West Virginia just isn't enough. Additionally, the rigid and in- 
flexible interpretation of regulations slows an already slow process down even more. 

The same problems with funding and inflexibility exist with EDA. As you know, 
all projects go to Philadelphia then to Washington then back to Philadelphia. 
Projects which might include some new wrinkle may go back and forth several 
times. Typically, projects take 2 or more years from the initial proposal to funding 
and construction. This is a very long time for public works projects, but impossibly 
long for economic development projects which have private sector partnerships. De- 
centralizing the decision making process and allowmg the regional office total au- 
thority should be investigated as a possible solution. 

Perhaps the most effective projects that both agencies have participated in have 
been public works projects (i.e. water systems, sewer systems). Although not directly 
connected to long-term job creation, infrastructure is crucial to building the frame- 
work for economic growth. Infrastructure is basic to making communities in this re- 
gion competitive when it comes to attracting and maintaining employers, whether 
large or small. Both public works and economic development projects, such as the 
Wood Technology Center, have been created with ARC and EDA grants. 

One of Region Seven's principal tasks has been to help our members identify, de- 
sign and finance critically needed projects. We may have an especially warm spot 
in our heart for these particular agencies because over the years they have provided 
the basic support to the region. As you know. Region Seven acts as the local devel- 
opment district for ARC and the Economic Development District under EDA. Funds 
provided have been used by the Council to act as the extension of the 31 local gov- 
ernments in our seven-county area. During the 20 years since Region Seven has 
been in business, EDA has expended more than 12 million dollars in direct grant 
assistance to local governments which have expended 8.5 million. 

Again, thank you for the interest in our comments. We commend your efforts and 
look forward to improvements in program operations of ARC and EDA. 
Sincerely, 

Bob Coit, 
Executive Director. 



Davis & Elkins College, 
Elkins, WV, April 21, 1993. 

Hon. Robert E. Wise, Jr., 
House of Representatives, 
Washington, DC. 

Dear Congressman Wise: We understand that Congress is preparing reauthor- 
ization legislation regarding the Economic Development Agency (EDA). Davis & 
Elkins College has received two small EDA planning grants of $3,000 each during 
the past three years, each of which permitted us to prepare specifications for the 
renovation of buildings as part of grants which were received by the City of Elkins. 



67 

The planning grants were awarded by the West Virginia Institute of Technology 
through the EDA University Center program and were critical to our success with 
these projects. We strongly support the EDA programs and view then as invest- 
ments in the future of America which produce new businesses, new jobs, and new 
taxpayers. 

In a time of economic transition, we strongly urge the reauthorization of the EDA 
programs with more administrative flexibility. We further recommend enhanced 
funding for EDA, perhaps with an increased focus on regions which suffer from high 
levels of chronic unemployment. 
Thank you for your consideration. 
Sincerely, 

Abbott A. Brayton, 
Vice President for Government Relations. 



Mountain Valley Bank, N.A., 

Elkins, WV, April 22, 1993. 
Congressman Bob Wise, 

2nd Congressional District, West Virginia, Rayhurn House Office Building, 
Washington, DC. 

Dear Congressman Wise: Thank you for your invitation to attend the public 
hearing in Elkins on Friday, April 23, however a previous commitment precludes 
my attendance at this meeting. 

While I am unable to attend this meeting I do appreciate the opportunity to offer 
my thoughts on EDA and ARC procedures for our area of West Virginia. 

In regards to the EDA I feel that if the EDA would be willing to work with some 
of the financial institutions of Appalachia in providing guaranteed government fund- 
ing for more small business or large business loans it would be extremely helpful 
for the economic development of our area. Too many times SBA type loans are such 
a cumbersome affair that the proposed applicants simply throw up their hands and 
walk away feeling that the effort is not worth what they have to go through to get 
an SBA type loan, this makes it extremely difficult for the bank to participate on 
SBA loans because of the cost of the counting involved which we can simply not af- 
ford to do for every prospective SBA loan customer. 

Perhaps the greatest contribution that you and your committee can make towards 
improving the economic conditions in West Virginia would be your continued sup- 
port of the Corridor H project regardless of whether it goes north or south, I feel 
that if it goes east and connects with Interstate 81 in Virginia that it will do more 
to contribute to the economic growth of our area than any other single event in the 
last 50 years. 

Thank you very much for the opportunity to express my opinions on these sub- 
jects. With every best wish and your assurance of my continued support I am 
Sincerely yours, 

James E. Wallace, 
Chairman of the Board. 



Mountain RC&D Forestry Committee, 

Summersville, WV, May 6, 1993. 
Subject: EDA University Center Fund. 
Hon. Robert E. Wise, Jr., 
House of Representatives, 
Washington, DC. 

I am writing to comment on the value of EDA University Center Funds which 
were provided West Virginia Institute of Technology to a project of Assessing Value- 
Added Manufacturing Alternative for the Output of Columbia-West Virginia Plant 
in Craigsville, WV last year. 

First we were impressed with the expediency the funds were allocated for the 
project. This allowed the research to get underway at a time when we needed it. 
The data is currently available to use and is being used by County Economic Devel- 
opment Groups. We anticipate further rural development in this area as a result 
of this project. 



68 

As consideration will be given to EDA University Center Funds in upcoming legis- 
lation, we would encourage your endorsement of this program as it is observed to 
be valuable in providing economic recovery of ovu- State. 

Fred Williams, 

Chairperson. 



I 



Martinsburg, WV (May 24, 1993) 
jane peters, exec. director, jefferson county development authority 

Stated that EDA and ARC programs are vital to the State and particularly the 
Panhandle section which is in a catch-22 situation. It is experiencing rapid growth 
but the State and local governments lack financial and other resources to provide 
infrastructure to meet development and growth needs. 

In the past, ARC provided assistance with two vital projects in Jefferson County — 
two industrial parks, one in the 1970's and another more recently. The construction 
period was a very positive experience — but the application process was a different 
story. ARC doesn't have the staff to administer its own grants — so it is handled by 
other agencies. Thus, procedures and regulations must be followed not only of ARC 
but of the other agency or agencies as well and the resulting duplication of effort 
causes a great deal of paperwork which takes a staggering amount of time. Sugges- 
tion: when other agencies are involved, they should be willing to accept ARC's appli- 
cation requirements. , 

Would like to have had more experience with EDA grants, but so far hasn t been 
able to. Her group was involved with the pre-application process in connection with 
one of the industrial parks, mentioned above, but was disqualified because the im- 
employment rate was below the national average. Circumstances since then have 
changed and the County would now meet the criteria easily. Financing the project 
by other means resulted in debt which has been hard to meet. 

Suggestion: that the criteria for EDA be more flexible so as not to disqualify an 
applicant solely for unemployment data reasons — take into consideration the cir- 
cumstances of the individual projects as well as their general location. 



DOUG STEIN, OLD NATIONAL BANK 

Stated that his experience with EDA has been limited with somewhat mixed re- 
sults. J 1 1 • 

The bank was involved with a fledgling company starting in the area and looking 
to create about 200 jobs — using the Farmers Home Administration and the W.VA. 
Economic Development Authority for construction of the plant. Some additional as- 
sistance was needed to get the plant operational and the Bank approach the U.S. 
EDA, working through the Philadelphia Regional Office. An application was put to- 
gether and the application process started in September 1989 with the loan being 
finally approved in June 1990. The company had been trying to operate since Au- 
gust but obviously with inadequate working capital — even though the owner had 
put about $2y2 million of this own funds into the projects— so it wasn't really 
undercapitalized. , „« a j t^ tr j 

EDA was slow and bureaucratic — even compared to SBA and Farmers Home — and 
it was one of the worst experiences Stein had to deal with in his banking career. 
The bank had to make a loan to keep the firm alive during the application process- 
not the usual type it would have made — but was betting on the good faith of the 
EDA to come through. The EDA agents they were dealing with at Philadelphia were 
very helpful and cooperative to the extent they could be, but one could sense the 
frustration they also had in trying to work out the details of the guarantee loan ap- 
plication with the layers of bureaucracy in Washington. Regional people did finally 
point out to the applicant the EDA hadn't been doing much by way of loans in re- 
cent years. 

Note: For FY 92, loan guarantee funds were cut and for FY 93 none were appro- 
priated because EDA wasn't utilizing the program. 



KEN GREEN, EXEC. DIRECTOR, REGION DC PLANNING AND DEVELOPMENT COUNCIL 

Green presented two pages of data (attached), one reflecting the population make- 
up of the Region and the other the ARC and EDA grant awards for projects m the 
Eastern Panhandle— Berkeley, Jefferson and Morgan counties— 1975 to 1993. Total 



69 

ARC funds awarded were $5,333,147 and total EDA awards were $5,821,750 for a 
grand total of $11,154,897. Down-to-earth projects — no swimming pools, etc. 

Current proposed projects being reviewed reflect a total of $1,097,000 for ARC (for 
a Regional Airport Industrial Park and the East Town Center Water System in 
Berkeley County) and $1,300,000 for EDA for the Regional Airport Industrial Park. 

In addition to direct project funding, EDA and ARC have provided continued ad- 
ministrative support from 1974 — grants for operation and maintenance of the East- 
ern Panhandle Regional Development Council. It is designated as a Local l3evelop- 
ment District (LDD) under ARC and as an Economic Development District (EDD) 
under EDA. There are 69 LDD's in the Appalachian Region under ARC and 293 
EDD's under EDA nationwide — primarily rural. The Council's support from ARC 
and EDA enables it to in turn provide support to communities and counties and to 
assist in access to EDA and ARC grants plus assistance from other Federal and 
State Programs. The Council has been instrumental in acquisition of other grant 
funds totaling $46,152,303 during 1975 to present. Grant ratio required only an 
added $4,524,954 in local matching funds— $1 local fund for $10 grant funds. 

Much of the $46 million grant funds came from programs no longer or barely in 
existence — such as Bureau of Outdoor Recreation, UDAG, certain EPA programs. 
Law Enforcement Assistance, etc. — indicative of what is happening in the economy 
and structure of government in terms of assistance. We are in dire need of the sup- 
port of ARC and EDA. The support for grass roots development district systems and 
local development efforts offers the opportunity for communities to participate in the 
process that redistributes their tax dollars where it directly and specifically is lo- 
cally identified and needed. 

The EDA and ARC programs have been extremely valuable to the Eastern Pan- 
handle over the last 19 years. Without the assistance the progress seen would not 
have occurred. There has been population growth with increased income levels, edu- 
cational level increases, labor force rising indicating job generation and a decrease 
in unemplo5Tnent. 

The funds provided by EDA and ARC programs and other assistance funds played 
a major part in facilitating growth and development and minimizing probable nega- 
tive impacts that growth and development can place on communities that otherwise 
have no means to control. Also, the programs offer the opportunity to enhance the 
future of non-dominant and distressed communities through the coalitions of local 
governments. They are able to get more empathy and assistance in partnership with 
the socio-economic and political neighbors — rather than in competition with them. 
For example, the needs of Morgan County in the Eastern Panhandle would have 
been in competitive difficulty with Berkeley and Jefferson County — but with a coali- 
tion, the County has been assisted with several development project — ^water sys- 
tems, industrial parks, etc. 

The Eastern panhandle is in the throes of urban transition and two counties are 
now designated in the BaltimoreAVashington Metropolitan Statistical area — it will 
undergo increasing call for infrastructure to support other growth demands. 

Dysfunctions of current programs 

Given that appropriations haven't varied much in recent years. Green sees the 
possibility of a couple of things occurring — one of which seems to have occurred al- 
ready. 

As the limited revenue has been spread out over the Federal system, the level of 
micromanagement taking place has increased. More comments about this can be ex- 
pected from others in terms of how long it takes to get an application approved. The 
graxit application and pre-application process goes through more hands. Green's sus- 
picion is that someone has decided that more bureaucrats are need and more activ- 
ity needed to make things look busier, even though the funds are less. If increased 
appropriations are not coming, then perhaps the number of personnel dealing with 
applications could be reduced and things might move along faster. 

A second concern is that the new Administration has indicated a priority for 
urban concerns — seems that Commerce Department might well route more funds to 
urban than rural. This could have a devastating effect on non-urban areas of the 
nation. 



JOE DOWNS, EXECUTIVE DIRECTOR, MORGAN COUNTY DEVELOPMENT AUTHORITY 

Stress some things about the EDA and ARC programs with regard to Morgan 
County, though he admitted his experience is not as great as some who have worked 
with the programs longer. Both EDA and ARC are job creation programs — perma- 
nent jobs that will be there for the long run — and are critical to the local economies 



70 

generally and to Morgan County's economy in particular. The Authority was grate- 
ful for these programs in the past and hopes to continue to work with them. 

Over recent years, the ARC program has been cut back. The Authority would like 
to see it beefed back up— particularly to respond to job creation issues. Jobs must 
be created in order to provide opportunities for our young people in West Virginia- 
meaningful jobs that will encourage them to stay instead of migrating elsewhere. 

Suggestion: Concerning the requirements and criteria for ARC's distressed coun- 
ties, they would like to see consideration given to making distressed areas within 
a county eligible as well for some of the funds in that program. 

Suggestion: The requirements for ARC generally are not overly restrictive, they 
are reasonable. However, one thing they would like to see is consideration that "in 
kind" services be provided as a local substitute for cash contribution. Cash for local 
match is sometimes very difficult to meet. 

Though strings must be attached to programs of this kind, they realize they must 
be there and are willing to live within those required by ARC. 

RE EDA: programs have assisted in providing meaningful jobs in Morgan County 
in the past. One suggestion for consideration: make it easier to get a change order 
okayed after a project has been approved. At present, it is very difficult to get a 
change order through. Another suggestion: they would like to see specific criteria 
to determine who is eligible for grants instead of what seems to be a rather subjec- 
tive review and decision process as to who gets grant approval. 

The Morgan County Authority appreciates the help it has received in the past and 
any kind of help it can receive in the future to help create jobs in Morgan County. 
Grants were involved in the industrial park in Paw Paw. 

Note: See attached copy of letter from the Morgan County Commission to Con- 
gressman Wise concerning EDA and ARC. 



BOB CRAWFORD, EXEC. DIRECTOR, BERKELEY COUNTY DEVELOPMENT AUTHORITY 

Attached is a copy of the statement. 
Crawford made two suggestions: 

(1) A change in guidelines so as to allow units of local government, public service 
districts, development authorities and others to secure grants to do what needs to 
be done to accommodate growth. 

(2) Increased funding levels for grant programs. 



SAM ASHELMAN, OWNER AND OPERATOR OF COOLFONT (A RESORT) 

Not familiar with the EDA and ARC programs— but does have a concern, as one 
who is in the tourist development business in Morgan County. 

A crisis is coming up with our landfill about to be closed. Also many have prob- 
lems of meeting the standards for what is put into our sewage systems. Some are 
grinding up garbage and dumping it into the central sewage system in Berkeley 
Springs, which doesn't help much. Concern is, how do we solve the landfill problem 
for better protection of streams in Berkeley Springs and In Morgan County. 

Question: is it possible in some way to get the Solid Waste Authority to do some- 
thing—which they want to do? The old question, of course, is how to pay for it. As 
part of the investigation put on by the Authority, a group went to Jefferson County 
to talk with a farmer who had started a compost pile using that for this cornfield 
and now was getting $100 per acre more for his corn than when he used commercial 
fertilizer. Is there a way to put this all together? 

Is it feasible to put together a project using the few dairy farmers in the country 
and tie in also with the tourist industry and solve some other problems with 
composting and sewage plant needs— as a demonstration project? Are funds avail- 
able in the ARC that could be used to help do something along that line? Ashelman 
said that, as a businessman, he would be willing to put some money into such a 
project, though having put $200,000 into the sewage plant there would be a limit. 

If there could be some grant assistance, once such a project got going, perhaps 
there would be some way to put money back into the ARC. 

Note: Bob Wise pointed out he was aware of the sewage and landfill problems in 
several areas of the nation— particularly rural areas that are having trouble meet- 
ing deadlines and costs for waste management. Having talked with Ashelman about 
the pilot project idea before, he has brought this to the attention of the ARC Federal 
Co-Chair for whatever consideration they can give it. Hopefully it will be talked 
about some more. 



71 

OPEN MIKE SPEAKERS FROM THE AUDIENCE 

Dr. Blanes Groves. Retired physician and former member State Bo£ird of Edu- 
cation. Spoke highly of the use of ARC funds for the Truck Driving Range and espe- 
cially for the Center for Handicapped Kids. 

Diane McCoy. Community Development Specialist for FOCUS (Free Our Citizens 
of Unhealthy Substances — a brochure was provided). Interested in economic devel- 
opment, ptirticularly in terms of its impact to the FOCUS CoaUtion approach, in- 
cluding efforts of ARC, based on concern about the quality of Ufe for residents. 
FOCUS promotes drug use and alcohol abuse prevention programs but sees the ties 
to development. 

Ken Lowe, Shepeu-dstown. Involved with ARC and with Ken Green's Planning 
and Development Council. 

Following up on the concept that Jane Peters addressed, i.e. that success drives 
the demfmd for infrastructure and concern about the benchmark criteria for grant- 
ing funds with the stress on unemployment rates being too low to qualify some 
areas, perhaps something could be done to make some funds available in particu- 
larly depressed areas, at lower interest rates, so that projects such as Jane's can 
get the help needed. 

Thinks one stop shopping is a good idea, but since it might do away with some 
agencies, he doubts it would go. 

Suggestion re Accountabili^: have agencies scrutinized and activities reviewed bv 
a group of private business people. Lowe's group does that now in a small way with 
the SBA and the Advisory Council can accomplish a lot without a lot of government 
involvement — can get more done in a short period of time such as a day or a day 
and a half. 

Suggestion: Use more pilot projects to take advantage of some of the good ideas 
here and available in the private sector that could be funded and which would open 
a lot of doors to ideas that otherwise might not get a chance. 



NATALIE CROME, EXEC. DIRECTOR OF THE HARDY COUNTY DEVELOPMENT AUTHORITY 

Supports Federal reauthorization of EDA and ARC because of the importance of 
the infrastructure assistance to the county and state. Was complimentary of the 
work of Byron Davis, the EDR for W/. Va. 

Thinks that the unemplo}rment rates are not accurate in the sense that a good 
many W. Va. people are working outside the county and also outside the State. If 
you take into account the overall picture of unemplo}rment, it might enable counties 
not now qualified to be quaUfied. 



JOHN WOODS (ENGINEER WITH AT&T) 

Supports efforts aimed at trying to develop infrastructure in the area to support 
commercial and other activities. 

Pointed out that they got the interchange on 1-81 that had been promised for a 
number of years; the sfmitary sewer project looks like a 'go'; but an area neglected 
in the infrastructure process is storm water management. With recent heavy rains 
and storms in the area, a number of districts have been inundated with the water. 

Note per Bob Wise comments: Storm Water Msmagement is tmder mandate from 
the Federal Government but with little money provided. It must be addressed in the 
Clean Water Act as well as other legislation. 



KEN GREEN— FURTHER COMMENTS 

Re: One-Stop Shopping: Now just at the beginning edge of concept — there is a 
pilot effort being undertaiken by the State Rural Development Councils. W. Va. is 
now in the second year of its Council. State of Kansas utilized its Council for the 
development of one-stop for the processing of business loans with the state. These 
Councils, by agreements between the President of the U.S. and the Governors and 
by mandates, involve decision-making level participants from Federal and State 
agencies and local governments and non-profits. Kansas wanted to be first — ^works 
with the different loan forms for Rural and other groups. One agency in the State 
was designated to administer all of the business loan programs, whether Farmers 
Home, SBA, EDA, and develop one form. They decided that the Regional Small 
Business Development Ctrs. were pretty accountable and even the Feds said they 
could utilize a generic form. Each state would have to become partners with the 



72 

Federal Government in this effort because there sure many differences among the 
States. Doubtful there will be one Federal agency doing this within the near future. 

Re: Accountability: It is hard to measure because economic development and so- 
cial services projecte take a long time to reflect any quick results. The value of put- 
ting in a sewer project one year isn't going to auickly be seen in terms of jobs cre- 
ated the very next year — it could even take as long as ten years to see positive re- 
sults. Even the legislation is often achieved incrementally with changes in regula- 
tions etc. yearly to make it work. We live with inconsistencies — so local accountabil- 
ity is often chasing what the inconsistencies are based on legislative or regulatory 
changes. We can he accoimtable physically and in terms of working on assistance 
programs, but to measure results is a difficult matter to pinpoint even though we 
know and can see improvements. 

Re: RLPs under Title EX: His Regional Council doesn't utilize the RLF business 
loan program. The area has a small business development center at the technical 
college which provides a lot of assistance on hi^h-risk business loan programs and 
a number of capable banks in the area that provide loans for business. 

Also, many local development groups throughout the country are having difficul- 
ties dealing with the Feds on this program, particularly with the lack of 
defederalizing which should be done to make RLF's more palatable. Also, in order 
to use the RLPs, it would mean bringing on board someone who could handle that 
type of activity. 



DOUG STEIN COMMENTS ON LOAN GUARANTEES 

Getting into loan guarantees, there is too much duplication of effort among Fed- 
eral agencies and too many loan limits of different agencies with different criteria. 
SBA has a program that has a relatively low limit. Small loan guarantee limits are 
no longer viable. 



JANE PETERS — FURTHER COMMENTS 



Thoughts on making the system simpler: Reduce the paperwork and duplication 
of application efforts. 

Archeological studies and "endangered species" studies may well be necessary but 
they add considerable time and are expensive. 



GENERAL COMMENT 

Standardizing forms for each agency would do much for the coimtry. However, 
given that so many jurisdictions and agencies are involved in the same projects — 
there should also be standardization of responsibility among local officials. Regional 
and State officials and those in Washington. 

When people are working at the grass roots to develop an area, or bring in a plant 
to create jobs, local people need someone to work with them on planning — to tell 
the local people "how to get a Federal grant and loan and what the process is and 
how it operates. 

ARC AND EDA GRANT AWARDS TO PROJECTS IN THE EASTERN PANHANDLE OF WEST VIRGINIA 
(BERKELEY, JEFFERSON, & MORGAN COUNTIES) 1975-93 

„ . . . .... ARC funds EDA funds 

Proiect Identifier ,^3^^^ 3^rded 

Hedgesville Water System $400,000 

Martinsburg Downtown Area Enhancements $163,000 

Bardane Industrial Park— Phase I 55,00 305,000 

Morgan County Hospital Wing 1,252,000 

Morgan Co./Warm Springs PSD Water System 230,000 

Martinsburg Fire Hall 700,000 

Martinsburg Street Paving 215,000 

Martinsburg Sewer Extension 190,000 

Berkeley Co. PSI>— Water & System 94,000 

Opequon PSD— Water & Sewer System 144,000 

Charles Town Street Paving 142,000 

Jefferson Co. Health Center 132,000 

Regional Health Center 1,100,000 



73 



ARC AND EDA GRANT AWARDS TO PROJECTS IN THE EASTERN PANHANDLE OF WEST VIRGINIA 
(BERKELEY, JEFFERSON, & MORGAN COUNTIES) 1975-93— Continued 



Project identifier 



ARC funds 
awarded 



EDA funds 
awanled 



Berkeley Heights Park 

Morgan County Hospital Equipment 

Bardane Industrial Park Improvements 

Bardane industrial Park Road/Highway Interesect 

Jefferson County Day Care 

Martinsburg Library Building 

Jefferson County Senior Center 

Berkeley Industrial Parit Road 

Bardane Industrial Access Road 

Paw Paw Water System 

Harpers Ferry/Bolivar Water System 

Bardane Industrial Park Fire Protection System .... 

Berkeley Co./Mid-Atlantic Industrial Park 

Morgan County Industrial Parks 

Beriteley Co./Arcata Water Supply 

Beri(eley Co./Arcata Rail Siding 

Bertieley Co./Arcata Sewer Service 

Jefferson Co./Burr Industrial Pari* 

Morgan County Retail Center Sewer & Water 

James Rumsey Voc/Tech Telecommunications 



66,000 
240,000 
170,000 

450,00 
167,000 
346,750 

35,000 

98.000 
828,945 
362,000 
316,872 

62,375 



147,500 
12,500 

450,000 

505,205 
90,000 

300,000 



442,000 
942,750 



Total grants funds to date 

Grant total ARC + EDA grant funds to date 

Current project applications in review 

Regional Airport Industrial Park 

Beri<eley Co. — East Town Center Water System 



5,333,147 


5,821,750 
11,154,897 






750,000 
347,000 


1,300,000 







Total of new proposed projects 1,097,000 


1,300,000 


CHANGE INDICATIONS REGION IX, 1970-1980-90 


Region IX 1970 1980 ^J^f^^ 1990 


Change 
(percent) 



Population 66,183 

Males 32,734 

Females 33,449 

Minority population 4,486 

Median age 30.2 

Housing units 22,660 

Median HH income 7,539 

Per capita income 2,354 

Means years education 10.0 

Percent completing high school 40.3 

Percent with college degrees 7.06 

Size of labor force 27,070 

Average unemployment rate 7.3 



87,788 


32.64 


107,307 


22.23 


43,708 


32.30 


52,630 


21.52 


44,480 


32.97 


54,677 


22.92 


5,687 


26.77 


6,734 


18.41 


31.2 


3.31 


34.6 


10.89 


34,998 


54.44 


52,905 


51.16 


17,334 


129.92 


27,575 


59.08 


6,252 


165.59 


12,167 


94.60 


10.7 


7 


11.6 


8.41 


55.9 


15.6 


67.13 


11.23 


12.4 


5.34 


13.3 


9 


43,728 


61.53 


53,507 


22.36 


9.9 


35.61 


6.5 


-34.34 



Morgan County Commission, 
Berkeley Springs, WV, May 21, 1993. 

Hon. Bob Wise, 

House of Representatives, Rayhurn House Office Building, 

Washington, DC. 

Dear Congressman Wise: We would like to thank you for this opportunity to ex- 
press our thoughts concerning the operations and management of the Economic De- 
velopment Administration and the Appalachian Regional Commission. Both agen- 
cies are significant to the future of economic development projects in distressed and 
rural parts of America. 

Morgan County has in the past had the fortune of receiving funding from both 
of these agencies. Funding from EDA was received for the construction of two indus- 
trial parks and ARC funds were used to help extend water and sewer lines to Mor- 



74 

can Square Shopping Center. Both projects are extremely important to the economic 
fiiture of Morgan Country. 

The Economic Development Administration has a focused and narrow view of 
what is considered fundable projects. The initial costs of preparation for being con- 
sidered for a grant from EDA can sometimes be prohibitive to local governments. 
Actual administrative costs and procedures associated with acquiring these funds 
can be extreme and cumulatively reduces project funds. In past experience we have 
fovmd the agency helpful, but their requirements too complex for small rural com- 
munities. The Appalachian Regional Commission appears to have the flexibility to 
very helpful to the rural commimity. It is generally the final opportunity for a rural 
area's viable project. Our experience has been that the Agency's lack of available 
administration at least appears to create efficiency by use of an existing managing 
agencies such as FHMA. 

It is very important that these agencies continue to provide assistance to West 
Virginia Economic Development projects as other means of support are essentially 
no longer available. Attention should be directed toward streamlining the proce- 
dures, eliminating unnecessary administrative costs and making stimulus packages 
available to rural West Virginia through a less complex avenue. 

Your consideration of our views regarding these valuable agencies is very much 
appreciated. 

Sincerely, 

Glen R. Stotler, 
President, Morgan County Commis- 
sion. 
T.E. Shufflebarger, Jr., 

Morgan County Commissioner. 
Richard G. Gay, 
Morgan County Commissioner. 



remarks of ROBERT T. CRAWFORD 

My name is Robert T. Crawford, and I am the Executive Director of the Berkeley 
County Development Authority in Martinsburg, WV. I appreciate the opportunity to 
speak at this time. 

My organization has utilized several grants in the past. We received a Small 
Cities Community Development Block Grant in the 1980's for the development of 
the Mid-Atlantic Industrial Park. Later, in connection with the Areata Graphics 
plant, we received ARC grants for $103,500, for the water distribution and fire pro- 
tection systems and $22,259 to assist with installation of the rail siding to the plant. 

Several years ago, the Berkeley County Development Authority began looking into 
the possibility of acquiring land and developing another industrial park. As we con- 
sidered funding sources, we discovered that in all probability, an EDA grant would 
not be an option to us. The Eastern West Virginia Regional Airport Authority al- 
ready had an application in process for infrastructure improvements for their park. 
We were told that, under current guidelines, the EDA could not approve grants for 
similar projects in the same county within a few years of one another. 

I could understand this line of reasoning if Berkeley County's economy was in a 
state of continuous decline; however, our economy is not declining. The Bureau of 
Census shows that fi-om 1980 to 1990, Berkeley County's population grew by 26.7 
percent, the Eastern Panhandle's population grew by an average of 20 percent and 
the State of West Virginia, as a whole, lost approximately 8 percent. 

Thanks in part to Senators Robert C. Byrd and Jay Rockefeller, companies and 
agencies are coming to the area, increasing our employment and tax base. This 
growth— and the potential for more growth— has brought great need for water, 
sewer, road and other infrastructure improvements. This requires large expendi- 
tures by local governments and the public service districts, but they are already 
strapped for funds. The solution would seem to be the use of grants through EDA, 
ARC, etc. ^ J . 

I am told that one of our Public Service Districts recently sought funding assist- 
ance for a new water treatment plant in order to tap into a new source of water 
and increase their treatment capacity. They were told that no grant funds were 
available because of the countjr's low unemplojonent rate and other such factors, 
meaning that they would have to look for dollars elsewhere. In essence, the cost of 
any infrastructure extensions would have to be borne by the existing customers. 

Fairness and reason would say that existing customers should not have to bear 
the expense of major extensions for the growth that has — and is — and will come to 
Berkeley County. 



75 



My plea today, Congressman Wise, is two-fold: 

1. For changes in the guidelines so as to allow units of local government, public 
service districts, development authorities and others to secure grants to do what 
needs to be done to accommodate growth. 

2. Increase the funding levels for the grant programs so that adequate dollars can 
be available for grants. 

Again, thank you for allowing me to share my concerns. 



TO EXAMINE EXISTD^G PROGRAMS UNDER 
THE PUBLIC WORKS AND ECONOMIC DE- 
VELOPMENT ACT OF 1965 AND THE APPA- 
LACHIAN REGIONAL DEVELOPMENT ACT OF 
1965 AND TO CONSIDER PROPOSALS TO RE- 
AUTHORIZE THE PROGRAMS AS WELL AS 
NEW INITIATIVES TO PROMOTE GROWTH 
AND DEVELOPMENT 



TUESDAY, JUNE 22, 1993 

House of Representatives, 
Subcommittee on Economic Development, 
Committee on Public Works and Transportation, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:05 a.m., in room 
2167, Raybum House Office Building, Hon. Robert E. Wise, Jr. 
(chairman of the subcommittee) presiding. 

Mr. Wise. This hearing of the Subcommittee on Economic Devel- 
opment before the full Public Works — full Public Works and Trans- 
portation Committee will come to order. 

This continues a series of hearings into the Economic Develop- 
ment Administration and the Appalachian Regional Commission. It 
is the intention of the subcommittee to reauthorize both of these 
this year. 

On our first day of hearings we focused on the Economic Devel- 
opment Administration. Today, we will focus on the ARC, the Ap- 
palachian Regional Commission, and I want to welcome and thank 
our witnesses who have taken the time to come and testify, includ- 
ing the Honorable Governor Brereton Jones of Kentucky. 

As one whose entire State is included within the Appalachian re- 
gion, I am especially interested in the programs ongoing through- 
out the region; what new initiatives might be under consideration 
and other legislative considerations we might consider to help pro- 
mote development in the region. 

I consider the ARC to be a model for what can be done on a re- 
gional basis, and indeed, I think one of the strong points of the Ap- 
palachian Regional Commission has been its true bipartisan na- 
ture. If there is an example of what many characterize as the New 
Federalism, it certainly is the Appalachian Regional Commission, 
because essentially it is run by the 13-member Governors where 
you have both a State cochair selected by the Governors and a Fed- 
eral cochair nominated by the President. 

(77) 



73-118 0-93-5 



78 

Concerning the Appalachian Regional Commission, (I am not a 
witness, but perhaps I should be) I can testify firsthand as to the 
progress it has brought to a hard-hit region. It has done so, I think, 
and enabled that region to capitalize on other resources, and many 
times the ARC acts as a pump priming mechanism. In terms of re- 
gional cooperation, it is certainly an example of what success can 
be achieved. 

Its job is not done yet and indeed the region has been hard-hit, 
in some cases more so perhaps than other regions, hard-hit over 
the past decade with the economic changes that have taken place 
in our society. 

I will give you just an example. When I first came into office a 
decade ago, there were 60,000 coal miners in our State. Today, 
there are less than 30,000 but mining more coal than ever mined 
before, so both the advent of technology as well as changes in our 
economic situation have hit our region hard. 

Today we will begin the testimony concerning the ARC. It was 
first adopted by this Congress and enacted in 1965. It has not been 
reauthorized since 1981. It certainly is time now to look to see 
what form the Appalachian Regional Commission should take; 
what its continued mission needs to be, what the problems are and 
how to meet those challenges. 

I am delighted to have an excellent series of panels. We will hear 
first from Governor Brereton Jones, the Governor of the State of 
Kentucky; the Honorable Bob Goodlatte, a new Member, whom we 
are delighted to have join us, from Virginia, accompanied by a 
number of persons fi-om his district; and then our third panel will 
consist of those who work firsthand from the States within the Ap- 
palachian Regional Commission. 

At this time, I would turn to the gentleman from Arkansas, Mr. 
Hutchinson, for any opening remarks he may wish to make. 

Mr. Hutchinson. Thank you, Mr. Chairman, and I am glad to 
welcome our panelists today. Ms. Molinari has been delayed, but 
she will be here soon, and she has an opening statement which I 
would like to ask unanimous consent to have inserted into the 
record. 

Mr. Wise. Without objection. 

[Ms. Molinari's prepared statement follows:] 

Statement of Hon. Susan Molinari 

Thank you Mr. Chairman. I join you in welcoming our witnesses today and I look 
forward to hearing their testimony. 

I do not represent a district that is part of the Appalachian Regional Commission, 
yet there are fourteen counties in New York State that participate in the Commis- 
sion. I have visited many of these areas, in fact, I was in Chautauqua County last 
weekend. Though the landscape is different from my district, the cnallenges these 
communities face are not substantially different from the needs of urban commu- 
nities. 

Members of the Committee know that adequate transportation infrastructure is 
needed in order to attract business and jobs to a community. In New York City, our 
transportation crisis is the result of congestion, poor maintenance, and in the case 
of Staten Island, outrageous tolls. The inability to move goods in and out of the re- 
gion has severely affected our ability to keep businesses in the city and to attract 
new business. 

For this reason, I appreciate the need to provide better transportation infrastruc- 
ture to communities in the ARC. The Appalachian Development Highway System 
is the centerpiece of this program to bring jobs to the isolated communities of Appa- 
lachia. With almost 75 percent of the Development Highway System complete, we 



79 

need to work together to see that the remaining 800 miles are finished as soon as 
possible. 

Thank you Mr. Chairman for holding this hearing to give me and our colleagues 
an opportunity to learn more about the Appalachian Regional Commission. 

Mr. Hutchinson. Let me just say that I am delighted today to 
be able to learn more about the Appalachian Regional Commission. 
Being a Congressman from the State of Arkansas, there are, I 
think, lessons that we can learn with the Delta Commission that 
have recently been identified in the last few years, which includes 
part of my congressional district, and then sharing many of the 
same demographics and economic concerns that we have in the Ap- 
pgdachian region. 

I look forward very much to hearing your testimony, presentation 
of our panelists today, and I thank you for your presence here. 

Thank you, Mr. Chairman. 

Mr. Wise. Thank the gentleman and turn to the gentleman fi*om 
Georgia, Mr. Deal. 

Mr. Deal. Thank you, Mr. Chairman. 

As we review the purpose behind this legislation today, I, too, 
would join with you as being one whose entire district is encom- 
passed within the definition of Appalachia. As we hear witnesses, 
I am sure we will hear many examples of successful projects such 
as highway projects, water and sewer projects, all of which have 
encouraged and assisted the development of our portion of the 
coxintry. 

Certainly, all of these funds from capital improvements have 
been very significant, however, I think we must always keep in 
mind the greatest resource this legislation was intended to develop 
was a human resource. It was and has been the lives of the citizens 
of those who live in the Appalachian region of our country who 
were the primary focus of this historic legislative effort. 

As we hear the testimony of witnesses today, I am sure it is the 
human element of these projects that will become obvious to all of 
us as having the greatest and most long lasting significance. By 
improving the quality of life for the children and elderly by improv- 
ing educational assistance for those who would otherwise be de- 
prived and generally improving the lives of our fellow citizens, do 
we justify the existence of programs such as this, and I am con- 
fident that this act can justify itself as a worthwhile legislative en- 
deavor. 

I look forward to hearing the testimony. Thank you for allowing 
me to make this statement. 

Mr. Wise. As they say on the Floor of the House, I will ask unan- 
imous consent to be associated with the remarks of the gentleman. 

Before we begin with our first witness, I would like to insert Mr. 
Blackwell's prepared statement into the record. 

[Mr. Blackwell's prepared statement follows:] 

Statement of Hon. Lucien E. Blackwell 

Thank you, Mr. Chairman. First, I would like to take this time to applaud you 
and my other colleagues for your continued support of these two vital programs. It 
has been 11 years since full reauthorization, and I believe you are committed to the 
cause and efforts of the Appalachian Regional Commission (ARC) and you have my 
full support. 



80 

I am most eager to learn how we can, as a legislative body, begin to modernize 
the ARC, so that we can put the American people back into the workforce and re- 
verse the long-standing deterioration of our nation. 

Today's hearing will show our commitment to the reauthorization of the ARC. At 
the same time, we must remember to take a reasoned and careful approach as we 
consider the issue before us. 

What's more, we must, in any event consider most favorably any measure which 
emphasizes as paramount the economic well being of our local communities and re- 
gions. 

We must also be sure that any program or concept we enact to improve the ARC 
offers reliability and awareness to the communities that are to be served. 

I have no doubt that we are capable of making a fair determination of what steps 
can and should be taken to allow the ARC to reach its full potential in overcoming 
the many obstacles it is currently facing. This subcommittee will play a vital role 
in making that determination, and I applaud you for your leadership, Mr. Chair- 
man, in this process. 

I welcome the witnesses who will appear before us today and eagerly await their 
testimony. 

Thank you, Mr. Chairman. 

Mr. Wise. On our first panel, we are fortunate to have represent- 
ing the Governors of the Appalachian Regional Commission, the 
Honorable Brereton Jones, Governor of the State of Kentucky, who 
will be accompanied by Michael Wenger, the Appalachian Gov- 
ernors' Washington representative. 

Let me note that I consider Governor Jones not only to be, of 
course, a very, very able Governor of Kentucky, but certainly some- 
body who speaks well for all Appalachia. 

I take some proprietary pride in Governor Jones since I rep- 
resent his hometown and he is a true internationalist. He had a 
distinguished career in West Virginia and then stepped across the 
line and, of course, now has a very, very distinguished career in 
Kentucky, and we are delighted to have him representing our en- 
tire region and delighted to have him here today. 

Governor Jones. 

TESTIMONY OF HON. BRERETON C. JONES, GOVERNOR, COM- 
MONWEALTH OF KENTUCKY, ACCOMPANIED BY MICHAEL 
WENGER, STATES' WASHINGTON REPRESENTATIVE, APPA- 
LACHIAN REGIONAL COMMISSION 

Governor Jones. Thank you very much, Mr. Chairman. I must 
admit, you give me a feeling of great confidence as I sit here and 
appear before you because my mother continually votes for you and 
says wonderful things about you, and I know that your chairman- 
ship of this committee is a chairmanship you feel very strongly 
about, as do L So I do appreciate being able to come here today 
and appear before this subcommittee. 

I think it is very important for us to recognize that what this 
committee has to oversee is of extreme importance to the Gov- 
ernors that I represent today. Governor Doug Wilder of Virginia is 
our State's cochairman this year and he sends his apologies for not 
being able to appear today. 

This subcommittee, as we all know, has been steadfast in its sup- 
port of the Appalachian Regional Commission. As Governor of Ken- 
tucky, in the heart of Appalachia, I know firsthand what your sup- 
port of this program has meant to our citizens, and I thank you 
very much for that. 



81 

In fact, Mr. Chairman, as you well know, it is in our two States 
that the effort to change the face of Appalachia actually began. You 
and I both have seen the dramatic impact of the ARC programs on 
the quality of life in much of the region. 

I personally applaud your aggressive leadership in holding these 
hearings and in promoting multiyear reauthorization legislation. 

I also applaud our President. For the first time in 13 years we 
have a budget recommendation fi*om the President which contains 
adequate funding for the Appalachian Regional Commission. 

Of course, we could effectively spend considerably more money to 
improve the quality of life and to create jobs in Appalachia, but we 
recognize the fiscal rea,lities and we are grateful for the President's 
support of a funding level which is consistent with what the Con- 
gress, in its wisdom, has provided us for the past two years. 

Let me also say that we pride ourselves on the bipartisan sup- 
port that we have had in Congress over the years, particularly on 
this committee. For years. Bill dinger fi*om Appalachian Penn- 
sylvania, was the Ranking Minority Member and a strong advocate 
for the commission. Representative Molinari may not represent a 
district in Appalachia, but we do appreciate her sensitivity to the 
needs of the region. 

There is strong bipartisan support among the Governors as well. 
In 1981, it was the bipartisan leadership of Governor Lamar Alex- 
ander of Tennessee and Jay Rockefeller of West Virginia which re- 
sulted in all 13 Appalachian Governors, nine Democrats and four 
Republicans at that time standing strong and united against the 
Reagan administration's effort to abolish the Appalachian Regional 
Commission. 

Earher this year, Mr. Chairman, the 13 Appalachian Governors, 
now 10 Democrats and three Republicans, unanimously reaffirmed 
their strong support in a resolution recommending continuation of 
the Appalachian Regional Commission. With your permission, I 
would like to enter this resolution as part of the record of this 
hearing. 

Mr. Wise. Without objection. 

[The resolution referred to follows:] 



82 



A RESOLUTION BY THE GOVERNORS OF THE 13 APPALACHUN STATES 

RECOMMENDING CONTINUATION OF THE 

APPALACHIAN REGIONAL COMMISSION 

Whereas, since 1965, the Appalachian Regional Commission (ARC) has enabled the 13 
Appalachian States to 1) overcome the isolation of the Region by completing more than 2,100 
miles of a planned highway network of 3,025 nailes; 2) enhance the quality of job training and 
readiness for employmenq 3) expand access to health care; 4) create more than two million new 
private sector jobs in the Region through invesmients in physical in&astiuctive and human 
development; and 5) put our states on the cutting edge of issues such as job skills and training, 
rural education reform, technology transfer, export promodon, teleccmmunicadons and 
tnanufacturing compeddveness; and 

Whereas, the effectiveness of the ARC results from 1) its policy-making partnership 
berAeen the Federal Government and the 13 Appalachian States; 2) its public-private alliances; 
3) its regional approach to problem- solving; and 4) its flexibility; and 

Whereas, despite the significant progress, much of Appalachia still lags behLid the nation 
in key indicators such as per capita market income, rates of poverty and unemployment, condition 
of infrastructure and levels of literacy and access to health care; and 

Whereas, the flexibility, responsiveness, cost-effectiveness and broad local, state and 
national support for the ARC partnership make it a model for how to quickly and effectively 
implement the rural development policies of the new Administration. 

Now, therefore, be it resolved by the Governors of the 13 Appalachian States: 

1 . That the programs of the Appalachian Regional Commission have made a critical 
difference in the progress of the Region since 1965 and should be continued until 
the Region has reached parity of economic opportunity ^ith the nation as a whole. 

2. That we commend to President Clinton's consideration ±e .ARC process as a way 
to address rural economic distress not only in Appalachia but in ouher 
concentrations of rural poverty, as well. To that end, we urge a serious 
examination of ways in which the .ARC programs can be strengthened and its 
lessons applied to other concentrations of rural econontic distress. 

3. That we look forward to working with I*resident Clinton and his Adnrinistration 
to insure that we focus on and build a consensus around the issues which are most 
imponant in promoting rural economic growth. 

4. That this resolution be promptly transmitted to President Clinton and :o all 
appropriate leaders in the Congress. 

Adopted unanimously by the Governors of the 13 .Appalachian States on February 1, 1993. 



83 

Governor JONES. The resolution extols the virtue of the work of 
the ARC in helping the 13 Appalachian States to overcome the iso- 
lation of the region by completing more than 2,200 miles of a 
planned highway network of 3,025 miles; enhance the quality of job 
.training and readiness for emplojrment; expand access to health 
care; create more than two million new private sector jobs in the 
region through investments in physical infrastructure and human 
development; and put our States on the cutting edge of issues such 
as job skills and training, rural education reform, technology trans- 
fer, export promotion, telecommunications and manufacturing com- 
petitiveness. 

Because of the ARC, more than 700 vocational and technical edu- 
cation facilities with the capacity to serve over 400,000 students 
per year have been created; a network of health care facilities and 
personnel has brought primary care within 30 minutes of virtually 
every resident; 20,000 housing units have been rehabilitated; more 
than 2,000 water, sewer, waste disposal, and other community de- 
velopment projects to provide basic services, enhance the quality of 
life, and attract private sector jobs have been completed; we are in- 
volved in demonstration projects in manufacturing competitiveness, 
telecommunications, and work force training; our highway system 
is more than two-thirds complete. 

In Kentucky, specifically, I would like to call your attention to 
two examples. One in Casey County. It was late in 1991 that the 
Casey County War Memorial Hospital in Liberty, Kentucky, was 
closed. This hospital was the only rural health facility accessible to 
county residents. Because Kentucky provided a $251,636 Appalach- 
ian Regional Commission grant, the facility has been reopened as 
a primary care center. Non-Federal funds of $139,000 were pro- 
vided. 

And today, as we are all focusing on health care, it is important 
for us to recognize that there are a number of hospitals that have 
to have their missions redefined or they will have to close. And 
being able to redefine the mission of this hospital into a primary 
care facility was of paramount importance to the people of that re- 
gion. And this could not have been accompHshed without the funds 
that came fi*om the ARC. 

I would also like to call your attention to a $350,000 grant that 
was made in Bath County, Kentucky, for the construction of a 
wastewater treatment and collection system serving 491 residents. 
Currently, raw sewage is discharged into creeks and ditches and 
standing in yards in this area due to failing septic systems. Nine- 
teen tests of ponds water creeks and ditches in a project area re- 
sulted in 100 percent contamination with fecal coliform above ac- 
ceptable levels, and an elementary school is located adjacent to one 
of the most severely contaminated creeks. 

Residents of this area have been working on this project for over 
four years, but it was the ARC funding that has been approved 
that will allow this project to continue. 

The resolution that we adopted also identifies the unique charac- 
teristics of the ARC which have enabled it to deliver on its prom- 
ises. First, its Federal-State-local partnership substantially re- 
duces bureaucratic red tape and assures more responsible and re- 
sponsive decision-making. 



84 

Second, the flexibility of its programs allows locally determined 
needs to be addressed without federally imposed artificial restric- 
tions. And here I think it is appropriate for us to realize that we 
as Governors feel very strongly that we must be accountable, and 
we are willing to be held accountable according to very tough 
standards and reasonable controls. It is this accountability, I think, 
that all the taxpayers are looking for and this is very appropriate 
that it must be part of this funding. 

Third, its regional approach produces significant economies of 
scale and helps to focus attention on economically distressed rural 
areas which otherwise could be easily ignored. For such areas it 
supplements rather than duplicates the work of other government 
agencies. 

Fourth, it requires cost sharing by State and local governments 
in both program and administrative expenditures. This magnifies 
the impact and ensures that scarce Federal dollars are spent effi- 
ciently. 

arc's $2.2 billion in nonhighway funding has attracted more 
than $5.5 billion in other funds. By working in close partnership 
with the private sector, ARC has managed in some cases to lever- 
age its spending at a ratio of better than 6 to 1. 

But, Mr. Chairman, despite the significant progress we have 
made, much of Appalachia still lags behind the Nation in key indi- 
cators such as per capita market income, rates of poverty and un- 
employment, condition of infi-astructure and levels of literacy and 
access to health care. In 1990, Appalachia's per capita income was 
80 percent of the U.S. per capita income. I would point out that in 
Appalachian Kentucky, that figure is only 63 percent of the U.S. 
per capita income. 

In 1990, 15.2 percent of our people lived in poverty compared to 
13.1 percent in the United States, but I would point out to you that 
in Kentucky that that number is closer to one-third. 

In December 1992, one-fourth of Appalachia's 399 coimties had 
unemployment rates of at least 150 percent of the national average. 
More than one-third of Appalachia's 300 nonmetropolitan counties 
are considered economically distressed. During the decade of the 
1980s, our population grew by approximately one quarter the rate 
that the U.S. population grew. Our manufacturing employment has 
declined by a rate greater than the national average. Our regional 
share of national coal output has fallen, and regional mining em- 
ployment has been cut almost in half. 

To compound the problem, Appalachia receives approximately 15 
percent less than the per capita national average in Federal ex- 
penditures. We have seen the progress, Mr. Chairman, but we also 
know how much remains to be done. That is why the Governors 
unanimously and enthusiastically support multiyear authorizing 
legislation for the Appalachian Regional Commission. 

We believe a bill of three to five years in duration at a funding 
level at least consistent with the current funding level would en- 
able us to continue significant progress toward achieving parity of 
economic opportunity with the entire Nation. At the same time, we 
would welcome increased flexibility in the allocation of funds be- 
tween highway and area development programs. This would enable 
us to ensure that we get the maximum impact from our dollars. 



85 

Of course, Mr. Chairman, we would be happy to discuss with you 
any other provisions which you may wish to consider, but I do want 
to make one other point. We believe that the flexibility, responsive- 
ness, the cost-effectiveness and the broad local, State and national 
support for the ARC partnership make it a model for how to effec- 
tively address concentrations of severe rural economic distress 
wherever they may exist. As you can see on the map that I handed 
you prior to this meeting, the primary concentrations of severe 
rural economic distress, denoted by the solid red, are in central Ap- 
palachia, the Lower Mississippi Delta, and along our border with 
Mexico. 

We believe that a serious examination of ways in which the ARC 
programs can be strengthened and its lessons applied to other con- 
centrations of rural economic distress is in order. We would wel- 
come the opportunity to work with the Congress and the adminis- 
tration to accomplish such an examination. 

I want you to know, Mr. Chairman, I very much appreciate the 
opportunity to appear before you this morning, and I would repeat 
something I said in the prepared remarks, that I think is very im- 
portant, and I believe that you would agree with me, and I know 
that the other Governors of the ARC region agree with this, and 
that is that we expect all money to be spent in a very accountable 
way. We think it is very important that we monitor the expendi- 
ture of this money ourselves, but we would always be very recep- 
tive to having you look over our shoulder to monitor it as well be- 
cause we believe that there is no expenditure of money in this gov- 
ernment today that gets a better response, that goes where it ought 
to go and does what it ought to do in a more cost-effective way than 
the money that is put in the Appalachian Regional Commission, 
and we want to guarantee that and we look forward to working 
with you in that regard. 

Thank you very much. 

Mr. Wise. Thank you very much. Governor, a very, very powerful 
statement. 

Why don't I just turn to that. 

As Governor, you handle a lot of different programs. Federal pro- 
grams, whether community development block grants or traditional 
highway funding from the U.S. Department of Transportation, I 
just wonder if you might comment how the ARC differs and what 
tools it gives you that perhaps the others do not? 

Governor JONES. Well, I think the flexibility is of extreme impor- 
tance. And it allows these programs to go into areas where we find 
that the need exists. 

For example, the hospital in Casey County I mentioned in my re- 
marks was closed. It wasn't a question that it was in trouble or 
that it was going to close, it was absolutely closed. It was closed 
because they did not have a niche in the marketplace. 

Many hospitals in Kentucky, and I am sure in other States as 
well, are unable to compete today, and we cannot subsidize these 
hospitals to allow them to compete any more than we could have, 
at the turn of the century, subsidized the buggy whip industry. 
There comes a time where you must realize if you are not produc- 
ing what you need to produce then you need to produce something 



86 

else. And these hospitals, this particular hospital, was not able to 
compete and the market had passed judgment on this hospital. 

But what they needed to do was to redefine their mission, to re- 
direct their efforts, to focus on primary care, because it was in an 
area of the State where we did not have adequate primgiry care 
physicians, family physicians. We in Kentucky have been educating 
too many specialists and not enough general practitioners, quite 
frankly. 

So we were able to take this grant and attract primary care phy- 
sicians to come into the community to open up a primary care cen- 
ter and thereby be able to satisfy the need that the public said ex- 
isted. 

So this hospital now has developed a niche in the market; they 
are a primary care center and they are able to keep their emer- 
gency room open for those emergencies that need to be cared for. 
So this came from ARC. 

But, by the same token, completely unrelated to that are high- 
way projects, over here, where you have given us the flexibility to 
say that we need a farm-to-market road, we need a particular piece 
of highway built, and this is for economic development. This allows 
us to create more jobs. This allows us to help ourselves and then, 
on the other hand, as I mentioned in Bath County, where we did 
100 different tests on the water system there, from different groups 
from the State health people to the county health people and dif- 
ferent private residents had their wells tested and found out that 
100 percent of them were contaminated and right next to a school. 

ARC was able to come to the rescue and help us. So I would say 
the flexibility of the program, the ability that we had to meet a va- 
riety of needs is probably the most distinguishing aspect of this 
program. 

Mr. Wise. Particularly as Governor of a State that ranges fi-om 
in some ways the most modem and most urban to the most rural, 
what would you tell those who would say but why do we have a 
regional commission called the Appalachian Regional Commission; 
why should there be one commission here and not commissions 
anywhere else? 

Governor JONES. That we don't have commissions? 

Mr. Wise. That we don't have commissions to perform the same 
functions anywhere else and certainly none that has ever been as 
operative and active as the ARC. 

Governor Jones. It would seem to me the philosophy of the ARC 
is relevant to all of government, and I see this as taking a leader- 
ship role. 

Certainly we have problems in other areas of the State that are 
not in our Appalachian area, and that is why the Governors passed 
the resolution that said — I do not have it before me at the moment, 
and I have not committed it to memory, but in essence it said — 
let me get a copy because I think it is worthwhile to read exactly 
what that wording is: 

That we commend to President Clinton's consideration the ARC 
process as a way to address rural economic distress not only in Ap- 
palachia but in other concentrations of rural poverty as well. To 
that end, we urge a serious examination of ways in which the ARC 



87 

programs can be strengthened and its lessons applied to other con- 
centrations of rural economic distress. 

Mr. Wise. Speaking of flexibility, some things have changed in 
our society since 1965 in our State, and I would ask whether it is 
the same in yours, in our State I am hearing increasing concern 
about solid waste disposal in rural counties and the need to meet 
the growing demand in expertise as well as developing sanitary 
methods for disposing of these wastes. Is this something the ARC 
could be involved in, do you think? 

Governor JoNES. Absolutely, 1,000 percent. 

Mr. Wise. Turn to the gentleman from Arkansas for questions he 
might have. 

Mr. Hutchinson. Thank you, Mr. Chairman, and. Governor, 
thank you for your testimony. 

In your testimony, you catalogue some of the economic challenges 
remaining for the Appalachian region, and I think you gave some 
statistics on the per capita income and how that compared with the 
national per capita income, 80 percent, I believe it was, and, in Ap- 
palachia, Kentucky, 63 percent or quite a bit less. 

I was wondering if you can — I am curious how that compares 
with when the ARC began. What kind of progress has been 
achieved thus far through the initiatives of the ARC? Is there any 
demonstrable evidence this has produced a move toward parity 
with the rest of the Nation? 

Governor Jones. When the commission began, it was 67 percent. 
That has increased 13 percent up to 80 percent. So it has been a 
13 percent positive change. 

Mr. Hutchinson. Now, with the mission and the goals of the 
ARC to be bringing that region into parity with the rest of the Na- 
tion, and with the evidence, or at least the seeming evidence there 
has been progress since the beghining of the ARC, is there a time 
frame, is there a date at which you anticipate the goals of the ARC 
actually having been achieved by bringing Appalachia into the eco- 
nomic mainstream and reaching parity with the rest of the Nation? 

Governor Jones. I would not have a definitive timetable that I 
could relay to you today. I would say this, as a practical matter, 
however, I think the needs are so great in that area, that the con- 
tinuation of existing funding would not in any reasonable way be 
expected to solve the problem totally but to merely allow a continu- 
ation of help in a positive way to an area that needs help. 

In other words, I think at some point we are going to have to 
make a still greater investment in self-help in the area than will 
be allowed to be made by this request. Because, as you know, we 
are not requesting an increase in the funding but only a continu- 
ation of the funding. I wish I could have a more definitive answer 
for you for that question, but I do not have that answer. 

Mr. Hutchinson. Well, I think the Chairman alluded to this. 
Some of us have to go back to districts that have equally dire eco- 
nomic distress factors, unemployment rates that are comparable 
and certainly in some of the ARC mountain counties I represent, 
they compare in those kinds of economic distress factors with the 
Appalachian region and it is the concern of my constituents, one, 
we have a Federal program that will exist in perpetuity and it is 
easier to defend that kind of program if I cannot only demonstrate 



88 

that there has been progress toward the goals but that there is 
Ught at the end of the tunnel, that there is a period at which we 
hope to see the goals of economic parity achieved and that that pro- 
gram won't simply continue forever. 

Governor JONES. Let me say this, in Kentucky, I feel very strong- 
ly that we will not solve the problems that need to be solved until 
we do things in addition to what ARC is now doing. Education, for 
example. We decided in 1990 that we were going to bite that bullet 
and that we were going to dramatically change the way our edu- 
cational system works and that we were going to fund that edu- 
cational system. And we are doing that right now and I beheve, as 
I am sure you would agree, that the key to long-term change and 
the key to success is in how we educate our young people; how we 
reeducate our work force; to help people to help themselves so that 
they are not dependent upon a number of these programs. 

But in the meantime, while we are getting them educated and 
the roads built with ARC help to come into the area so that we can 
attract the jobs that we need to attract and we will have the people 
qualified to hold those jobs, while we are getting to that point, 
being able to take care of these needs that exist relative to cleaning 
up that sewage problem in Bath County or reopening that hospital 
in KC Coiinty, this is a real lifesaver for us. 

Mr. Hutchinson. Moving on to one other area, the Clinton ad- 
ministration has several initiatives for rural development including 
new programs at the Department of Agriculture's RDA. How does 
the arc's programs fit within the overall fi-amework of Federal 
programs for rural and distressed areas? 

Governor JONES. Well, I do not have the total details of those 
proposals, but I would reiterate what I earlier said, and that is 
that I think the way the ARC has been put together and the pro- 
grams that it allows the Appalachian counties to achieve is at the 
top of the list. I mean, I don't know of any Federal program that 
I think is more important than the ARC program for the Appalach- 
ian counties. 

Mr. Wise. Would the gentleman yield on that question? 

Mr. Hutchinson. Yes. 

Mr. Wise. I think the gentleman fi*om Arkansas has raised an 
excellent question. How does this fit in with the other programs? 
Would it be fair to observe. Governor, that the main difference is 
that in the ARC, the Governors are directly involved in the deci- 
sion-making process and the running of these programs, whereas 
whether it is RDA in the Department of Agriculture or CDBG or 
whatever, it is a direct Federal role? 

Governor JoNES. Absolutely. And that is the flexibility issue I re- 
ferred to earlier that makes it so attractive. 

Mr. Wise. I thank the gentleman. 

Mr. Hutchinson. Thank you, Mr. Chairman. 

Mr. Wise. The gentleman fi-om Michigan, Mr. Barcia, for ques- 
tioning, please. 

Mr. Barcia. Thank you, Mr. Chairman. I don't have an opening 
statement, but I would like to commend the Governor on his re- 
marks and say that I do feel there is a need in Congress to present 
a collective or regional approach toward the solution of your long- 
term problems and of course develop solutions to the challenges 



89 

that you face. Being from Michigan, we do have a coalition of Mid- 
west States that helps us stick together on issues so we can face 
the many challenges that the Great Lakes' basin faces in water re- 
sources and protecting our natural resources. 

So I appreciate your remarks and you are well thought of and 
I commend you for your presence before the committee today, and 
say that as one Member from the Midwest region, I appreciate the 
cohesiveness that the Appalachism States have working together in 
presenting a united front to the Congress on your needs. 

Governor JoNES. Thank you very much, 

Mr. Wise. Governor, a question I would have is the ARC is di- 
vided into highway and nonhighway programs. Would you discuss 
some of the roles of the highway program as you see it, particularly 
in Kentucky? And by your testimony, two-thirds of that highway 
system is now complete. 

Governor JoNES. Well, obviously that means we have to complete 
the other one-third, so don't leave us high and dry. 

Mr. Wise. Have you, in Kentucky — I know the situation in West 
Virginia, but in Kentucky are there segments that are under way 
or under contract but still segments that have not yet been com- 
pleted? 

Governor JONES. Yes, we do have — I do not have the detailed 
mileage in front of me, but we do have some that are under con- 
struction that are not yet completed and we have other areas that 
we need to let contracts on that have not yet been let. 

Mr. Wise. As I recall, this is a highway system that the Gov- 
ernors have signed off on and has been authorized, in effect since 
1965 or shortly thereafter; is that correct? 

Governor JONES. That is correct, yes, sir. 

Mr. Wise. I might also mention I was reading the ARC report 
a few weeks ago and I noted with interest in those counties where 
there has been an ARC highway extended, that their job creation 
rate is running three times the rate of nonhighway-linked counties. 
I think that is an incredible statement as we work to complete 
West Virginia Corridor G that connects to Kentucky and bridges 
our two States even more. 

Governor Jones. That is right, and, of course, that gets us back 
to the self-help issue. I think it is very important that we recognize 
that we are not coming before this committee to say that all we 
want is a handout and you keep pumping the money in and we are 
all going to be satisfied, without trying to focus on how we get peo- 
ple off welfare. 

It is not a question of just extending welfare but how we get peo- 
ple off welfare and get people self-sufficient, and it is through the 
construction of these highways that allows us to provide the jobs. 
And, as I mentioned earUer, if we didn't have the educational proc- 
ess also going simultaneously with this, we would, in great degree, 
only be asking for a continuation of help, which really is just a con- 
tinuation of welfare. 

That is not what this program is about, as I see it. I see it as 
a way to help our people work themselves out of welfare, out of de- 
pendence on the Federal Government or the State Government. I 
am willing, and my fellow Governors in the Appalachian Regionsd 



90 

Commission are willing, to have the closest kind of scrutiny to 
make certain that is the way we are spending this money. 

Mr. Wise. Thank you for an excellent point as well. 

It just occurred to me, I was calculating in terms of welfare and 
AFDC and medicaid, the State of West Virginia's medicaid budget 
is I believe $1.1 billion this year, the AFDC, and perhaps that in- 
cludes food stamps somewhere around $100 million this year. Total 
ARC budget, if approved as presently recommended, is approxi- 
mately $189 million for 13 States, and yet out of that you put into 
motion those measures that take people off of welfare. 

I don't think there is a vocational technical school in our State 
that doesn't have ARC backing behind it; so many of the water sys- 
tems, the industrial development parks, and so on and so on. So 
it is truly a way we can save a lot of dollars and a lot of, I think, 
lives in years to come in addition to what it has already done. 

I would turn to Mr. Boehlert for any remarks or questions. 

Mr. Boehlert. No questions, Mr. Chairman. I could start asking 
about water projects, but he doesn't want to get into that right 
now. But another time, another place. 

Mr. Wise. Gentleman from Michigan, any questions? 

Mr. Hoekstra. No questions. Thank you. 

Mr. Wise. Governor, thank you very much for your time and ap- 
pearing on behalf of the Governors of the Appalachian Regional 
Commission, and we certainly look forward to working with you 
and look forward to every time you come home, too. 

Governor Jones. Thank you very much. 

Mr. Wise. The next panel will be the Honorable Bob Goodlatte, 
representing the 6th District of Virginia in the House of Represent- 
atives, accompanied by Stuart Litvin, Executive Director, 
Rockbridge Area Economic Development Commission, Lexington, 
Virginia; Timothy Gubala, Director of Economic Development, Roa- 
noke, County, Virginia; and E. Randall Wertz, Deputy Assistant 
County Administrator, Montgomery County, Virginia. 

Before Congressman Goodlatte starts, I want you all to know 
that this fellow has been tireless in pressing his case on inclusion 
of your counties into the ARC, and the first time we met on the 
Floor, we had barely dispensed with the pleasantries before he 
started making his presentation, and, of course, in conjunction with 
Congressman Boucher. But he has been extremely aggressive, and 
I am very impressed by the panel you have brought here today, so 
we look forward to hearing your testimony. 

Let me just say to each of you that your written testimony is al- 
ready made a part of the record, so I invite you to summarize or 
to make any points you might, and if anyone cares to react to any- 
thing the previous witness said. 

At this point, for housekeeping purposes, I would ask unanimous 
consent to include in the record of the hearing the map that Gov- 
ernor Jones presented showing the counties in poverty. Hearing no 
objection, that will be included in the record. 

Congressman Goodlatte. 

[The map referred to follows:] 



91 




92 

TESTIMONY OF HON. BOB GOODLATTE, A REPRESENTATIVE 
IN CONGRESS FROM VIRGINIA, ACCOMPANIED BY STUART L. 
LITVm, CED, EXECUTIVE DIRECTOR, ROCKBRIDGE AREA 
ECONOMIC DEVELOPMENT COMMISSION, LEXINGTON, VA, 
TIMOTHY GUBALA, DIRECTOR OF ECONOMIC DEVELOP- 
MENT, ROANOKE COUNTY, VA, AND E. RANDALL WERTZ, 
DEPUTY ASSISTANT COUNTY ADMINISTRATOR, MONTGOM- 
ERY COUNTY, VA 

Mr. GoODLATTE. Thank you, Mr. Chairman, and I do very much 
appreciate your including us in the hearing that you are conducting 
today. 

I join with my fellow Virginian, Congressman Rick Boucher, in 
requesting these additions to the Appalachian Regional Commis- 
sion. Congressman Boucher and I have introduced legislation that 
would include the counties of Roanoke, Rockbridge, Montgomery, 
and the contiguous, independent cities of Roanoke, Salem, Radford, 
Lexington and Buena Vista as a part of the Appalachian Regional 
Commission. 

Roanoke and Rockbridge are in my congressional district. Roa- 
noke County is contiguous to Montgomery County in Congressman 
Boucher's district. Rockbridge County is contiguous to three coun- 
ties already in the Appalachian Regional Commission. 

Congressm£in Boucher was not able to be present today and 
asked that I submit his testimony for the record. In addition, Gov- 
ernor Wilder, of Virginia, has submitted a letter in support of this 
legislation, which I believe you have in your file, Mr. Chairman. 

When the ARC was created over 25 years ago, Roanoke, 
Rockbridge and Montgomery Counties were asked to join. At that 
time the loc£il ofiici£ils decided not to become members. In hind- 
sight, this decision was a mistake not only for the three counties 
but also for the area counties which are members. Many economic 
development projects require the participation of adjoining coun- 
ties, yet Roanoke, Rockbridge and Montgomery Counties are ex- 
cluded from any project funded by the ARC. 

Already a part of the Appalachian region both geographically and 
culturally, these three counties have demonstrated a clear need for 
the development opportunities available through the ARC. If these 
counties and the contiguous independent cities are designated as 
part of the ARC region, there will be an enhanced opportunity to 
pursue joint programs. The potential for combined efforts in tour- 
ism, infrastructure projects and strengthening competitiveness in 
attracting new business would be tremendous. 

In addition, for the ARC to ultimately succeed in its mission to 
provide Appalachia with the infrastructure it needs to develop into 
an economically viable region, it only makes sense these three im- 
portant counties be added to its membership. Their addition will 
provide an essential sense of regionalism with the counties already 
in ARC allowing them to work together to solve the many problems 
of the area. It is time to realize that city, county and even State 
lines are becoming less and less a barrier to cooperation. 

Finally, by designating the Roanoke Valley, Rockbridge County 
and Montgomery County as a part of ARC, Congress will be 
strengthening the partnership between western and southwestern 
Virginia. 



93 

Mr. Timothy Gubala, the Director of Economic Development for 
Roanoke Comity, Mr. Stuart Litvin, Executive Director for Eco- 
nomic Development for Rockbridge County, and Mr. Randy Wertz, 
Deputy County Administrator for Montgomery County are accom- 
panying me today. I am sure they will explain in more detail the 
types of cooperative efforts that will be possible if these counties 
are included in the ARC. 

In closing, I again want to thank the subcommittee for its consid- 
eration Eind urge the Members to favorably support this legislation. 

Mr. Wise. We look forward to working with you in this request 
as we put together this legislation. 

Any particular order you wanted people to speak in or should we 
go in the order listed? 

Mr. GrOODLATTE. Mr. Litvin. 

Mr. Wise. Mr. Litvin, representing the Rockbridge area Eco- 
nomic Development Commission from Lexington, Kentucky. 

Mr. Litvin. Mr. Chairman, it is a pleasure to be here today and 
appearing before you. I appreciate the opportunity. 

I represent Rockbridge County, the city of Lexington and the city 
of Buena Vista. We are bordered on our west by the coxmties of 
Alleghany, Bath, and Highland, as well as the cities of Clifton 
Forge and Covington, all present members of ARC. 

There exists among these five localities and the Rockbridge area 
a great deal of commonality and cooperation. The community col- 
lege, Dabney S. Lancaster, located in Clifton Forge, serves these 
five communities as well as our three. These same jurisdictions are 
presently investigating a regional approach, along with the 
Rockbridge area, along with establishment of a recycling center 
that would serve the citizens within the region. There is also a dis- 
cussion concerning the possibility of a regional landfill as well. 

These are the same jurisdictions that comprise the Western Vir- 
ginia Educational Consortium that is involved in the Tech Prep 
Program, which advocates a lifelong learning approach to edu- 
cation. 

These are just a few samplings of the cooperation that exists be- 
tween these jurisdictions with Rockbridge. There are other exam- 
ples that are indicative of the commonality of the region, such as 
shopping, cultural and recreational patterns, and recently we have 
joined together in looking at a joint marketing approach of our area 
for industrial development. 

By allowing the Rockbridge area to be admitted to the ARC, you 
would be of great assistance in ensuring that these projects and 
other levels of cooperation continue within the region of western 
Virginia, a cooperation that would benefit all of its citizens. 

Needless to say, the relationship between Roanoke County, 
which is our gateway as far as our airport goes, and with Mont- 
gomery Coiinty, which serves as home to Virginia Polytechnic Insti- 
tute and State University, which is one of our major resources for 
research for our economic development efforts, is there. The com- 
monality, the cooperation would exist but it would also be en- 
hanced by the allowance of all of us being included into ARC. 

Thank you very much, Mr. Chairman. 

Mr. Wise. Thank you, Mr. Litvin. 



94 

Next will be Mr. Gubala representing the Economic Development 
Authority of Roanoke. 

Mr. Gubala. Mr. Chairman and Members, thank you for the op- 
portunity to be here today. I had testified previously, last year, 
when we worked on this program to try to be included within the 
ARC boundaries. 

To summarize my comments and to refer to Congressman 
Goodlatte, we are really interested in partnerships. I think we have 
a history in Roanoke County and Roanoke Valley of looking for 
partnerships and opportunities to solve common problems that face 
us. 

We have suffered recently in the job losses and the recession that 
has hit the Roanoke valley. For instance, we had two companies 
that had announced job losses of over 1,200 employees. Fifty per- 
cent of those citizens are residents of Roanoke County. We feel that 
that ripple effect kind of went through the community and the Val- 
ley and really affected a lot of the supporting businesses and serv- 
ices and the earning power of many families in Roanoke County. 

We see the Appalachian Regional Commission has a variety of 
different programs that offer Roanoke County some abilities to ex- 
pand and diversify the employment base. We currently have under 
development a 177 acre industrial park. We have county money 
that was generated from a bond referendum last fall as well as 
State money to develop that park as a first phase. We look to ARC 
as being a possible partner in the development of the additional 
two phases of that site so we can provide other employment oppor- 
tunities to replace some of the job loss that we have had in the 

community. ^ r^ i^ 

We are blessed with transportation routes in Roanoke County. 
Interstate 81 extends through the county. It is 17 miles. We have 
six interchanges. All of the interchanges are within the county. We 
feel that our Convention and Visitors Bureau has indicated there 
are 16 milhon potential visitors, and knowing ARC's emphasis on 
tourism development, there are some innovative programs that our 
convention bureau has been looking at, such as visitors' informa- 
tion radio, as one way of bringing those people into the Roanoke 
Valley so that we c£in bring them to our attractions and cultural 
events. 

We also have 27 miles of the Blue Ridge Parkway in Roanoke 
County. Recently an environmental impact statement was com- 
pleted for the Roanoke River Parkway. One of the recommenda- 
tions in that study was the development of a visitors' information 
center. 

Again, we are identifying partners in the Roanoke Valley be- 
tween the county, some of the regional groups, the State of Vir- 
ginia, and we feel again ARC may be a partner in the development 
with Federal agencies of a joint visitors' information center that 
will serve the entire Blue Ridge regional western Virginia. 

We have a cooperative history in Roanoke County of working 
with our neighbors, particularly Botetourt County, where we have 
a joint industrial park, the Jack Smith Park. We have a Hollins 
Community Development block grant that we received several 
years ago that is joint with Botetourt County. We have done also 
a joint fire station and have the only joint Ubrary in the State of 



95 

Virginia with another county. Botetourt is an ARC county and we 
feel that we could perhaps do a lot more things. 

There is another large industrial site on the interstate we have 
been talking about developing and we think that ARC funding 
sources could be a good resource for us in the future. 

Roanoke Comity has the perspective that during the 1990s local 
governments really are going to have to look regionally to solve 
some of their common problems. Inclusion of Roanoke Coimty with- 
in the boundaries of the Appalachian Regional Commission is a re- 
source for Roanoke County to develop these partnerships and ad- 
dress challenges and opportunities within the Roanoke Valley and 
western Virginia. 

Interestingly enough, in October, between October 24 and 28 of 
this year, the Appalachian Regional Commission is going to hold a 
fall conference in Roanoke, Virginia. We feel it would be a fitting 
and proper location to announce the inclusion of Roanoke County 
and our neighboring communities within the Appalachian Regional 
Commission. 

Thank you, Mr. Chairman. 

Mr. Wise. I want to commend your tourism bureau. That is a 
nice move. 

My one concern is — well, the ARC wouldn't be meeting in 
Greensboro anyhow, so I want to make sure we are not taking any- 
thing from others that are within the region. 

The gentleman from Montgomery County, Mr. Wertz, the Deputy 
Assistant County Administrator. 

Mr. Wertz. Thank you, Mr. Chairman. 

It is a privilege for me to address the subcommittee on behalf of 
the Montgomery County Board of Supervisors and the citizens of 
our county. 

I am here in support of House Resolution 1451, which seeks to 
include Montgomery County, Virginia, in the Appalachian region so 
that the county may qualify for programs administered by the Ap- 

{)alachian Regional Commission. This action was requested by reso- 
ution of the Montgomery County Board of Supervisors in October 
1991. 

Nestled between the Appalachian Plateau and the Blue Ridge 
Mountains, Montgomery County, a community of 74,000 people, is 
geographically a part of the Appalachian region. Our cultural herit- 
age is that of hard working discipline, hearty survivorship and a 
s&ong work ethic which the Appalachian people have come to rep- 
resent. 

Not surprisingly, the economic development goals of Montgomery 
County are those of the ARC: To provide our citizens with the edu- 
cation and skills needed to compete worldwide for economic oppor- 
tunities; to diversify our economic base; and to protect our environ- 
ment so that we can support a population with enhanced job oppor- 
tunities, increased incomes, and improved standards of living. 

Although Montgomery County is blessed with an abundance of 
natural resources and creative people, our unemployment, poverty 
and income data indicate that a number of our citizens are not 
sharing in the American dream. Indeed, our county is a study in 
contrasts. Home to Virginia Tech, the largest university in Vir- 
ginia, the town of Blacksburg in Montgomery County has been rec- 



96 

ognized as having the fourth highest concentration of Ph.D.s per 
capita in the Nation. Yet, in 1990, 26 percent of all Montgomery 
County residents aged 25 and over did not have a high school edu- 
cation, and in the more rural areas of the county this figure ex- 
ceeded 50 percent. 

While Montgomery County has seen continued population growth 
through the decades — 16 percent growth during the 1980s — em- 
plo5nnent opportunities have not been able to keep pace with the 
growing labor force. The result is increasing unemployment. As an 
illustration, throughout the early 1980s, the unemplo3nnent rate in 
Montgomery County remained below the national average, but in 
1986 it met the national average and then surpassed it in 1988. 
During 1992, Montgomery Count^s unemployment rate averaged 
8.3 percent, compared to the national average of 7.4 percent. 

According to the 1990 Census, over 14,000 persons, representing 
22 percent of the population, had incomes below the poverty level 
during 1989; this is an increase of 2 percentage points and 3,500 
people over the 1979 figures. The 1990 Census also revealed the 
county's per capita income was only $10,979 during 1989. 

For a number of years, jurisdictions in our region have worked 
cooperatively to assure improved services to our residents. We 
know how valuable regional efforts, as emphasized by the ARC, are 
to local governments. Recently, a critically needed tool and die 
training program was estabhshed in New River Community College 
with the assistance of a $200,000 ARC grant. Montgomery Count/s 
economic development staff had worked diligently for a number of 
years to see this effort become a reality. Regrettably, we could not 
participate as an applicant since the county was not within the de- 
fined Appalachian region. 

Over the past three decades Montgomery County has attempted 
to address social welfare needs and provide economic opportunities 
for all its citizens. Although many gains have been achieved by tak- 
ing this course, the county recognized that inclusion in the Appa- 
lachian region at this time would greatly assist us in the goal of 
equipping our citizens with all the tools needed to attain com- 
prehensive, balanced and enduring economic development objec- 
tives. 

Geographically and economically, Montgomery County is a can- 
didate for inclusion in the Appalachian region. Our citizens' quality 
of life would be greatly benefitted fi-om the housing, health, edu- 
cational, transportation, infrastructure and environmental opportu- 
nities that are available through the programs administered by the 
ARC. 

On behalf of the Board of Supervisors and citizens of Montgom- 
ery County, I respectfiiUy request that the members of this sub- 
committee recommend House Resolution 1451 for approval so that 
Montgomery Coimty can join with 21 other counties and five cities 
in the Commonwealth of Virginia which are presently included in 
the Appalachian Regional Commission. 

Thank you for the opportunity to address the subcommittee on 
this issue of critical importance to the citizens of Montgomery 
County. This concludes my verbal remarks; however, I would like 
to submit for the record written testimony which includes the text 
of the Montgomery County Board of Supervisors' resolution re- 



97 

questing inclusion in the ARC and the 1991 economic report which 
provides more detail on Montgomery County's economic condition 
and trends. 

Mr. Wise. Thank you very much. 

A couple of brief questions. I think your statements are very fac- 
tual and a lot of material has been presented to the subcommittee 
in advance of your testimony. I am not interested in digging up old 
history and who shot whom, when. 

I notice that, Mr. Wertz, you sent, along with your testimony, a 
resolution passed by the county commission requesting this action. 
That suggests to me there is probably accord within Montgomery 
County. I want to make sure this is not an item of dispute in other 
counties. We try not to force the ARC on anybody. 

Mr. GOODLATTE. Mr. Chairman, every county, and the independ- 
ent cities that are within these counties, have passed resolutions 
asking to be made a part of the commission. 

Mr. Wise. I do love imanimity. 

Also, are these counties presently participating in some form of 
local development district; is that a structure that you have in this 
region of Virginia? 

Mr. GUBALA. Under the Economic Development Administration? 

Mr. Wise. Yes. 

Mr. GUBALA. Roanoke County is not a member of that. 

Mr. Wise. To your knowledge, is there, I think they are usually 
known as locEil development districts in West Virginia — we call 
them regional planning councils. You know the gist; several coun- 
ties that pool resources, and municipalities and counties that pool 
resources so that they can then all apply for whatever programs 
are available and get additional assistance. 

Does that structure exist in your region or is it something your 
county simply has chosen not to participate in? 

Mr. GUBALA. We are, in Roanoke County, a member of the Fifth 
Planning District Commission which serves a broader area of coun- 
ties around the Roanoke Valley. 

Mr. Wise. Are you aware whether or not that is funded by the 
EDA? 

Mr. GUBALA. Their director is here. Part of their funding is from 
EDA for some of the other communities that are in the district. 

Mr. Wise. Does the ARC also assist those districts? 

Mr. GoODLATTE. That planning district includes both counties 
that are already in ARC and those that are not. 

Mr. LiTVlN. Mr. Chairman, the Rockbridge area is part of the 
Sixth Planning District Commission, and of course we have both 
Bath and Highland Counties represented in the Sixth Planning 
District Commission. And when they apply for ARC funding, that 
in no way impacts Rockbridge at this time. 

Mr. Wise. Mr. Boehlert. 

Mr. Boehlert. No questions. 

Mr. Wise. Mr. Deal. 

Mr. Deal. No questions. 

Mr. Wise. There are no further questions. I want to thank you 
very much for your presentation and your simple supporting infor- 
mation. 



98 

As I say, Mr. Goodlatte, has been very, very helpful and aggres- 
sive in pursuing this, as has Congressman Boucher, and the sub- 
committee will be glad to work with both of you in seeing what can 
be done as we move this legislation closer to authorization. 

Thank you very much. 

Mr. Goodlatte. Thank you, Mr. Chairman. 

Mr. Wise. Our final panel, and I would ask if you would take 
your seats. We have Fred VanKirk, Commissioner, West Virginia 
Department of Transportation, Division of Highways fi-om Charles- 
ton, West Virginia— always good to see Fred again; Linda G. 
Gayheart, Executive Director of the Kentucky River Area Develop- 
ment District fi-om Hazard, Kentucky; David Patterson, President 
of the Tennessee Technology Foundation from Knoxville, Ten- 
nessee; Gordon Whitener, Vice President of Marketing, the Collins 
& Aikman Corporation, Floor Covering Division, Dalton, Georgia; 
E.K. Adams, Executive Director of the University Industry Public 
Partnership for Economic Growth, Endicott, New York; and the 
Honorable James W. Robinson, Chairman of the Virginia Board of 
Housing and Commimity Development, Pound, Virginia. 

Ladies and gentlemen, I welcome you all. Your written state- 
ments will be made a part of the record. Thank you for taking the 
time for testifying concerning the Appalachian Regional Commis- 
sion. We might as well proceed in the order listed, so I will take 
this opportunity to introduce the first witness, Fred VanKirk, Com- 
missioner of the Division of Highways, West Virginia Department 
of Transportation, who, if anyone knows how to leverage a dollar 
better than him, I have not met them yet. 

He takes the fewest dollars and gets more miles out of them than 
anyone I have ever seen, and I appreciate the fact he has dem- 
onstrated well what the Appalachian Region can do, particularly in 
the highway related program and the importance of this for the 
rural area. So, Fred, we welcome you and look forward to your tes- 
timony. 

TESTIMONY OF FRED VANKIRK, DEPUTY SECRETARY AND 
STATE HIGHWAY ENGINEER COMMISSIONER, WEST VIR- 
GINIA DEPARTMENT OF TRANSPORTATION, DIVISION OF 
HIGHWAYS; LINDA G. GAYHEART, EXECUTIVE DIRECTOR, 
KENTUCKY RIVER AREA DEVELOPMENT DISTRICT; DAVID 
PATTERSON, TENNESSEE TECHNOLOGY FOUNDATION, 
KNOXVILLE, TN; GORDON WHITENER, VICE PRESIDENT OF 
MARKETING, COLLINS & AIKMAN CORP., FLOOR COVERINGS 
DIVISION, DALTON, GA; E.K. ADAMS, EXECUTIVE DIRECTOR, 
UNIVERSITY INDUSTRY PUBLIC PARTNERSHIP FOR ECO- 
NOMIC GROWTH, ENDICOTT, NY; HON. JAMES W. ROBINSON, 
CHAIRMAN, VIRGINIA BOARD OF HOUSING AND COMMUNITY 
DEVELOPMENT, POUND, VA 

Mr. VanKirk. Thank you very much, Mr. Chairman, and mem- 
bers of the committee. It is certainly a pleasure to be here today 
to speak on behalf of the State of West Virginia and the entire Ap- 
palachian Regional Commission, particularly with respect to the 
development of the highway system that was created back in 1965. 
I would also like to take this opportunity to thank the committee 
and the Congress for keeping the Appalachian Regional Commis- 



99 

sion alive over the rough time we had there in the 1980s. I have 
submitted my written comments but I will just summarize those 

briefly. 

The purpose of the Appalachian highway system back in 1965 
was to provide the opportunity for development where commerce 
and communications had been inhibited due to the lack of access 
because of the transportation system, as Governor Jones from Ken- 
tucky said. We have completed 2,217 miles of the 3,028 mile sys- 
tem designated in 1965. 

We can talk about the benefits of the highway system, we can 
talk about travel time, the reduction of the time it takes to traverse 
between the major cities, not only in the Appalachian region, but 
in the major outlying urban areas that surround the region; we can 
talk about highway safety, and in the State of West Virginia, the 
accident rate in the Appalachian system is less than 40 percent of 
what it is on the remainder of our primary rural highway system. 
So it is a tremendous savings in the amount of accidents that occur 
on the highway system. 

We can talk about economic benefits and we can cover that chick- 
en and the egg thing in a multitude of ways, but in the State of 
West Virginia, just as we speak, there is development taking place 
south of Charleston where there are retail stores, government de- 
tention centers, U.S. Postal Service, mail sorting facilities, hght in- 
dustry. . 

Just last week when the first retail store opened for busmess in 
the State of West Virginia, there were over 1,000 appUcants for 240 
jobs at that one retail estabhshment. That development would not 
take place without the construction of Corridor G from Charleston 
to Williamson and into the State of Kentucky. 

So our failure to complete the Appalachian system that we start- 
ed out in 1965 will allow us, I believe, to regress back to the days 
that we were back in the 1960s. I hate to date myself, but back in 
the 1963-1964, when we were talking about putting together an 
Appalachian Regional Commission, I was the gopher, so to speak, 
to the then State Highway Commissioner in the State of West Vir- 
ginia. We put together the estimates and the system and the mile- 
age for the overall Appalachian region. At that time, the interstate 
system was just being cranked up and the Appalachian program 
was nothing more than a dream. But in my career, we have seen 
the completion of the interstate system in July of 1988, and we 
have completed 70 percent of the Appalachian program. 

We still have a long way to go, that other 30 percent, but in the 
State of West Virginia we are actively pursuing the completion of 
the four segments that are not completed. We are doing that in a 
very environmentally responsible manner and we have the engi- 
neering capabilities to do it. We have the resolve in the State of 
West Virginia to complete the Appalachian program. 

We need the support of the Appalachian Regional Commission 
and we need the support of the United States Congress. Thank you 
very much. 

Mr. Wise. Thank you very much. Commissioner VanKirk. 

The next witness will be Linda G. Gayheart, the Executive Direc- 
tor of the Kanawha River Development District— I was being collo- 



100 

quial. The Kanawha system is my home county — and she is from 
Hazard, Kentucky 

Ms. Gayheart. Thank you very much. It is nice to be here today. 
I am located in southeastern Kentucky and we consider that the 
heart of the Appalachian Regional Commission area; next door to 
you. 

Mr. Wise. We shift it around to you a little, but we will give it 
to you for purposes of the testimony. 

And by the way, to help the court reporter, Kanawha is spelled 
K-A-N-A-W-H-A. 

Ms. Gayheart. We do represent one of the most depressed parts 
of our Nation, and as you will see from what I have to say today, 
we have made great strides in the past 20 years but we have far 
to go. 

Our district is eight counties and we consist of 2,500 square 
miles of population of 123,000 people. We are plagued by many 
problems and Governor Jones talked about some of those this 
morning. 

We are losing our population. Based on the 1990 Census, we lost 
8 percent of our population and this was primarily due to out-mi- 
gration. 

Our poverty rate ranges from 25 to 48 percent and our per capita 
income average for the eight counties is $9,000. We are the home 
of Owsley County, Kentucky, and that is the fourth poorest county 
in the Nation. So, realistically speaking, we are hard-core Appa- 
lachia, and we do lag behind the rest of the Nation in most meas- 
ures of quality of life. 

But as I said, we have made great strides with the help of ARC. 
It has been a major factor in that growth. ARC has been the glue 
that has held projects together, it has given us that extra edge that 
we have to have in order to put a project together, it has enabled 
us to leverage other Federal and State ftinds. 

ARC has enabled us to build a foundation of basic community 
services on which we now must further build. We are a one-indus- 
try economy, historically. And today coal is our dominant industry. 
For the past 20 years — in 1978, Congressman Wise, you alluded to 
this earlier, the decrease in employment in the mining industry, it 
took 18,000 miners to mine 30 million tons of coal and today 14,000 
miners mine 45 million tons of coal. 

According to the Kentucky Geological Survey, we have 20 years 
left of minable coal and due to mechanization, employment is de- 
creasing. 

Our official unemployment rate is 15 percent, but the true unem- 
ployment rate ranges from 30 to 50 and even 60 percent, and I am 
sure you are aware of the concept of the discouraged worker, the 
hard-core unemployed who is no longer seeking emplojrment. There 
are no jobs to find within our district. We continue to lose jobs in 
the mining industry daily. We have less than 800 manufacturing 
jobs in our district. 

I mention we are losing population and that is our brightest and 
best. We are losing our young people, who after completing their 
education they go away to receive further training or go away to 
college or get a job and they don't come back because there are no 
jobs to come back to. So it is imperative that we diversify our econ- 



101 

omy, that we create jobs for our present population and for our fu- 
ture generations. 

It is very difficult to create jobs. Why would an industry locate 
in Hazard, Kentucky, when they could locate in a community closer 
to an interstate or a community with better infrastructure or better 
social and cultural events? 

With the help of ARC, we are focusing on that diversification. We 
are looking at telecommunication, the wood industry, small busi- 
ness development and tourism. Programs such as the revolving 
loan fund from ARC gives us that extra edge that we have to have 
to complete with more developed areas. 

Training and retraining of our work force is critical. We have 
made great strides and ARC has played a major role in that. We 
have a vocational education center now within a half-hour's drive 
of our population. But we must now focus on training our dis- 
located workers as we try to diversify our economy. 

Congressman Wise, you mentioned solid waste and this is a prob- 
lem that is major for us. We have only begun to address solid 
waste in the past five or six years and we are just beginning. We 
are not close to finishing with this problem, and I don't have to tell 
you how importsmt it is for our residents as well to attracting in- 
dustry and tourism. 

We have one county that has taken a lead statewide in our rural 
area with a door-to-door county-wide collection system made pos- 
sible by fiinds from ARC to purchase equipment. Some of that had 
to be specially-equipped four wheel drives to deal with the rugged 
terrain. Solid waste is one of the many problems that are facing 
local governments, and more and more the responsibility is going 
to our local governments with fewer funds to deal with these prob- 
lems and that is particularly difficult for our rural area. 

We have made great strides in water and sewer. ARC assisted 
our 12 smaller communities to build water plants, construct sewer 
facilities and run water and sewer lines, but we still have 65 per- 
cent of our population without public water and sewer services. 

I would be amiss if I did not discuss the concept most dear to 
me, and that is the concept you mentioned earlier of regionalism; 
communities working together through local development districts. 
This is occurring throughout Appalachia because of ARC. Local de- 
velopment districts are working with communities to solve prob- 
lems. We bring our leaders together on a monthly and even more 
often basis. It is an opportunity for them to share their concerns 
and to solve their problems together. 

We are breaking down county lines because, as you know, needs 
do not respect county boundaries. There are many examples of re- 
gional approaches to problem solving in Appalachia. We have a 
joint purchasing program where our communities work together to 
purchase equipment and supplies, thus saving money. We are try- 
ing to deal with our problem with solid waste on a regional basis 
because it is much bigger than one community. Many of our health 
services are provided on a regional basis. We have a new regional 
medical center made possible because of regional cooperation. 

In addition to this, the local development districts provide the 
professional staff to local governments that they cannot otherwise 
afford. We assist them in so many areas, including budgeting, per- 



102 

sonnel matters, strategic planning, grant applications and just any 
area that they would deal with. We are the arm of ARC and EDA. 
We are out there on the frontline and should be used as a model 
for other t3T3es of Federal and State programs. We are able to 
match the needs of local commiuiities with the intent of State and 
Federal programs. 

I believe local development districts and the concept of regional- 
ism is one of the most critical programs in a day of scarce re- 
sources. We make the programs like ARC and EDA work. If we 
were removed and if ARC was removed, it would take away the 
only opportunity for communities to work together and would take 
away their professional staff. I sincerely believe that would set 
back our local communities at least 20 years. 

Everything that ARC has done in our area will have lasting re- 
sults, but an area having the most impact, I believe, is in the area 
of leadership development. Our district has benefited in two ways 
from leadership, the role that ARC has played in leadership. 

ARC assisted us in developing a program to work with youth 
throughout our region. In this youth leadership program, our young 
people gain much. They gain the knowledge and appreciation of the 
role of leadership, both elected and nonelected. They also began to 
understand the concept of regiongdism and people working to- 
gether. 

They actually developed a program, took it from an idea all the 
way through implementation. The most important thing they 
learned is that one person can make a difference. We hope that be- 
cause of this, many of these young people wiU want to come back 
to the region and make that difference. 

Another program that ARC was involved in in our district in 
leadership is with the Brushy Fork Institute of Berea College. 
Brushy Fork takes teams of individuals from communities through- 
out Appalachia, develops leadership skills within them, then they 
go back home and become change agents within their commiuiity. 

During the past year, we have been involved in a process of stra- 
tegic planning in our eight counties to give us direction for the fu- 
ture. We involved over 1,500 citizens in comm\inity meetings and 
citizen surveys. They identified the following as the needs we need 
to focus on: jobs, the environment, leadership development, and 
human resources. These will be the areas where we focus over the 
next several years. 

Important things are happening in Kentucky with education re- 
form, and the Governor mentioned our health caie reform. This is 
important to our entire State but especially in eastern Kentucky. 
We have built the foundation of basic infrastructure and services. 
We now need to focus on our economic development, human serv- 
ices and leadership. 

It is going to be difficult but it is not impossible. I urge your con- 
tinued support of the Appalachian program to enable us to con- 
tinue to improve our quality of life. Thank you very much. 

Mr. Wise. Thank you, Ms. Gayheart. 

If the subcommittee will indulge me for just a minute, I was 
struck by several things you said and I wanted to comment now 
as opposed to waiting. 



103 

You evoked a lot in me as you were talking about Appalachia. 
If you need the New York Philharmonic to be within an hour's 
drive, Appalachia is not the place for you, but I think the attraction 
of where we live, whether it is Hazard or West Virginia or wher- 
ever, and what can attract people there as well as hold people 
there is a way of life that we have. Not entirely rural, although in 
a rural area it has a lower crime rate than what you will find in 
most of this country; a strong family ethic and a strong family 
structure, where people help one another and neighbors know one 
another; a very good work ethic and a certain ingenuity that goes 
beyond simply filUng an eight to five job. 

I guess what my five year old son calls simply trees; he is not 
surrounded by tall buildings and crowds and things that seem to 
be out of his control and, in truth, are out of our control. So those 
are the benefits. 

We in Appalachia are not asking for a hsmdout, we are proud of 
what we have, but I think you msdce the case for the need to have 
that which helps us to develop. 

There is another reason for this as well. As I was growing up, 
I noticed that when I would go to different cities, Cincinnati, Chi- 
cago, other areas, I would always be pointed out to Little Appa- 
lachia. That is a section of urban areas where Appalachians mi- 
grated to because there were not opportunities. So that, in turn, 
put a cost or a drain upon the social services of that area. 

By the same token, we didn't want to be there either, and, in- 
deed, I was aJso struck when I was growing up by what was known 
as the Detroit bus, and those were the people that would on Sun- 
day night take a bus to Detroit to work in the auto plants and then 
on Friday evening, the bus would come around £ind pick them up 
and take them home to Appalachia, and it would make a run 
through West Virginia, southern West Virginia and then over to 
Kentucky, and then the bus would pick them up again and take 
them back to Detroit for the following week. 

What the ARC does, and the programs I believe you are advocat- 
ing, is permit Appalachia to develop to its fullest. It permits people 
to stay home. I think most significantly it permits children to stay 
home. Our children. 

I spoke at a high school commencement, and it is true of any 
high school in my State, that roughly 70 percent of the children 
feel they have to leave our State in order to find opportunity. Much 
later, as I did, you find out that was not necessarily the case, but 
that is the perception at least. 

And it permits Appalachia, which is an important area of our 
country, to stay self-sufficient. You also noted the coal production. 
I don't know what your sulfur content is, but that is an added chal- 
lenge as well. So it is important we be able to diversify that econ- 
omy, as you have urged. 

I thank the subcommittee for letting me indulge, but I think you 
touched on a lot of important parts of Appalachia and why the ARC 
is unique but it is also dealing with a unique area of the country. 
And, yes, I understand and, indeed, we need to appreciate other 
areas have their own unique aspects, and I think the Congress and 
the States should be as responsive to them as we are asking in the 
case of the Appalachian Regional Commission, and, indeed, it 



104 

would be the hope of this subcommittee to look at those areas and 
perhaps see if there are some things that can be borrowed from the 
ARC and extended to other areas as well. 

I thank you very much. 

I now recognize Mr, David Patterson, the President of the Ten- 
nessee Technology Foiuidation of Knoxville, Tennessee. 

Mr. Patterson. Thank you, Mr. Chairman, and members of the 
committee. 

My name is David Patterson, President of the Tennessee Tech- 
nology Foundation, a small five person nonprofit organization. We 
focus on technology-based economic development in Tennessee, pri- 
marily in east Tennessee. The bulk of our efforts go to help new 
and small businesses get started and to be able to expand. We 
work with other organizations, private and governmental, to en- 
courage entrepreneurship and expand the region's commercial ap- 
plications of the R&D resoxirces of the area, particularly Oak Ridge 
and the University. 

The foundation was started in 1982, and the Appalachian Re- 
gion£d Commission provided our first infusion of funds the follow- 
ing year with a contract that yielded $1.2 million over five years. 
Most of our funding from that time has come from the State of Ten- 
nessee. 

Was the initial investment of the ARC a good one? It has helped 
the Technology Foundation get started and it was managed by 
ARC with an absolute minimum of interference and no real bu- 
reaucracy. With ARC'S funding and the subsequent State funding 
we, and a number of people in our region, believe the foundation 
is doing what it was intended to do; and, of course, no one in the 
economic development business can claim full credit for success, be- 
cause no matter how hard you work or the level of effort extended, 
success always depends on a lot of other people and of course a lot 
of luck. 

Over 14,000 technology-based jobs have been created in the Oak 
Ridge and Knoxville technology corridor in the private sector since 
1983. A significant number of those, particularly those that are due 
to start-ups and small business expansions, are the direct or indi- 
rect result of our efforts. 

We are proud of a very significant increase in the level of entre- 
preneurial activities and a general understanding of the impor- 
tance of technology for the future of our region, and, of course, for 
the Nation. 

Using ARC funds, we started and spun off a nonprofit R&D cen- 
ter which has been successful and now employs not a whole lot of 
people, 35 or 40, but it is having an impact on small businesses 
around the Appalachian region as well as around the rest of the 
country. 

We have designed and managed a promotion and support activity 
to encourage participation in the Federal Small Business Innova- 
tion Research program, SBIR, program. This has contributed to 
Tennessee realizing nearly 50 million in the small business R&D 
contracts since 1983. Therefore, based on other Federal studies 
which indicate a dollar and a half of private sector money for every 
dollar of SBIR money, that is $200 million that has come into Ten- 
nessee, primarily in east Tennessee. 



105 

I believe we have had also a small hand in encouraging change 
in our State and local institutions with respect to their understand- 
ing and support of technology-based economic development. The 
original work plan that we agreed to under the ARC contract was 
that we would try to identify the major weaknesses that were in 
our region. 

One of those, of course, is a lack of technical entrepreneur ship. 
Our area, even though it had Oak Ridge National Laboratory and 
the university was basically dominated by sort of a mill town atti- 
tude, and there was really little private sector activity that was 
separated from the very large companies that were there. That has 
turned around. We have an increasing number of small firms. 

The second area of misunderstanding or of ignorance was the de- 
velopment potential of the technology base offered by the university 
and the Oak Ridge people and facilities, and that has also changed. 

The third one was one that we still have in lots of other parts 
of the country, and I was happy to hear some people here talk 
about that, is a thing, an area that they are working on, and that 
is the total lack of cooperation that existed at that time between 
the various counties and the cities in what was a common area. 
The very organization of our foundation, with a board dominated 
by business and community leaders from the three largest counties, 
was an important step towards a meaningful regional cooperation. 

Today, the region is together on a number of interests that are 
important to the region, including the highway system, the airport, 
a 15-county marketing area or organization for industrial develop- 
ment, foreign trade zone and support for continued funding for this 
kind of activity that I am involved with. And now with the defense 
cutbacks that affect the regional emplojonent in our area, that in- 
cludes about 25 or 30 counties that depended on Oak Ridge to one 
degree or another, there is a will and a means for working together 
to mitigate these impacts that would not have been possible several 
years ago. 

We have had some other opportunities to participate in activities 
with ARC. With the help of ARC, we were able to build and man- 
age a project in Tullahoma, Tennessee, that enabled those people 
to receive a NASA grant. Because of the way that ARC managed 
that project, we were able to return $13,500 to the ARC directly 
because we brought it in on time and under budget. We also re- 
turned more than $20,000 to the treasury in terms of interest. 

This is another example of the best of ARC. They listened to the 
proposal, they obtained the cooperation of the TVA and the State 
of Tennessee and they let us go to work with the minimum of over- 
sight. 

I want to conclude on two points. First, the ARC is an unusual 
nonbureaucratic Federal organization that is successful because it 
is based on cooperation between the State and local government 
and other appropriate organizations. I have resided in the ARC's 
region almost since birth. First in Irons, Ohio, and later in 
Reardon, West Virginia, and now Knoxville, Tennessee, and I am 
proud to have the opportunity to testify on its behalf. 

I am certainly not an unbiased witness, but I would suggest that 
ARC needs to address additional efforts to promote the appropriate 



106 

infrastructure to support technology-based business and economic 
development around its region. 

Over the years, ARC has helped communities a great deal by 
supporting efforts to improve the traditional sorts of infrastructure 
necessary for economic development; roads, sewers and water sys- 
tems that need to be continued, but technology is the driver for eco- 
nomic development for the present and future, whether for so- 
called high-tech products or relatively prosaic ones. 

The firm that does not have advanced technology in its process 
of manufacture or service will not survive and grow. The small and 
middle-sized firms that dominate most of the Appalachian region 
need to access technology easily. The colleges and technical schools 
need to educate people to use technology, and some are, and the 
financial systems must somehow adapt to help firms invest in ap- 
propriate technology. There should be strong efforts to get wider 
participation by small firms in the Federal SBIR program. 

These are the infrastructure needs of this next decade, and if 
they are not provided, the region will not fiilfiU the promise the re- 
gion deserves. Thank you. 

Mr. Wise. Thank you, Mr. Patterson. 

Our next witness is Gordon Whitener. Did I pronounce that cor- 
rectly? 

Mr. Whitener. Yes, sir. 

Mr. Wise. Vice President of Marketing with Collins & Aikman, 
Floor Coverings Division, from Dalton, Georgia, and I believe a con- 
stituent of the gentleman from Georgia, Mr. Deal. 

Mr. Whitener. That is correct. 

First, let me say thank you to Congressman Deal for being here 
for this. 

Mr. Chairman, let me begin by saying thank you for the oppor- 
tvmity to represent Dalton, Georgia. It is an honor for me to come 
before this subcommittee and present our apprenticeship program. 

I want to start by recognizing the three most critical elements of 
our program: The Dalton public school system, the Appalachian Re- 
gional Commission and, of course, the carpet industry, with special 
appreciation to Collins & Aikman, where I am employed. 

I am particularly grateful to Mr. Charlie Eitel, President of C&A 
Floor Coverings, for allowing me to be a catalyst to start up and 
participate in programs Uke this, and also gracious and loving 
thanks to my wife, Georgeann, for her support. 

I have a belief that industry and education should work together 
not to save education, but to take learning to a new level. We are 
in a critical time in American business. Strong foreign competition 
is present in every industry, and we have no choice but to fight to 
win. A^Hien planning the vdtimate strategy for global competition, 
the obvious place to focus is education. 

American business has, and will continue to have, a fiduciary re- 
sponsibility to get involved with education. In addition, I think edu- 
cators will have a responsibility to take a proactive position in the 
search for business partners. Business excellence in America will 
take a total team effort. 

The National Association of Manufacturers, in a November 1991 
report, estimated that the average manufacturer rejects five out of 
every six candidates. Two-thirds of companies regularly reject ap- 



107 

plicants as unfit for the work environment; a third regularly reject 
applicants because they cannot read or write adequately; and one- 
fourth reject applicants because of poor communication and math 
skills. 

In addition, these same manufacturers convey major employee 
skills deficiencies in basic math, reading and problem-solving in 
their existing employee populations. The same survey reveals that 
more than 60 percent of companies claim that part-time, on-site 
work experience is the most important schoolwork linkage, but far 
fewer companies are actually involved in these programs. And, fi- 
nally, the same study discovered that smaller companies are at 
much greater risk than others from labor shortages and skills gaps 
in the applicant pool and employed work force. 

This last statement is the one that I think is the most damaging 
because, as you know, most jobs are created by small business. 

Now, I realize that the members of this committee are inundated 
with statistics, but there is one statistic that I want you to remem- 
ber. When we found that more than one-third of our employees at 
Colhns & Aikman did not have a high school diploma, we knew we 
must do something about it. Any company with one-third of their 
employees being high school dropouts is really not, I guess, the 
ideal situation to compete globally. So, the big question is how do 
we respond to this crisis? 

I want to tell you I have been a very fortunate young man. My 
parents were great and have been super role models. I was blessed 
to have been reared in the Dalton public school system and in the 
Appalachian district. I am proud to be from a community that 
cares about its own. For these reasons, I had long felt the need to 
give something back to the school system and the community. 

I had discussed some broad ideas with friends and basically the 
one thing that came back is if you try something like this, you will 
run into a bureaucratic nightmare with public school systems, in 
addition to government. But when I went to the Dalton public 
schools and the superintendent, Frank Thomason, I can tell you he 
was nothing but receptive and introduced me to John McMillan, 
who, by the way, happens to be a West Virginian, and I met with 
Dr. McMillan several times and it was obvious to me this was one 
of the most forward thinking individuals I had ever met, particu- 
larly in the public school system. 

My main ideas revolved around the fact I came through Dalton 
schools and really never had a grasp of what the carpet industry 
was ^1 about. We are the carpet industry for the world, if you are 
familiar with our area, as some 60 to 80 percent of the world's car- 
pets originates within the Dalton area or a 100 mile radius of 
there. So the basic myth was that either you owned a carpet com- 
pany or you worked on a tufting machine. There was no idea of the 
magnitude of occupations throughout a company like ours; of all 
different types of professions. We never discussed the industry or 
anything about it during school, so I chose to focus my efforts on 
this deficiency. 

In 1991, I put a group of individuals together which we called 
the Dalton plan: industry and education working together. This 
group basically worked hard to start several programs, and we ulti- 
mately called the practice "Inside Track." We have held a carpet 



108 

careers week and held leadership seminars, in addition to what I 
think is the most important program, the apprenticeship program. 
It is the most important program because we created jobs with the 
apprenticeship program. 

Dr. McMillan, along with his colleagues, Wendy Hanson aiid 
Mary Smith, have given a great deal of time to make it an effective 
program. The main driving force behind the apprenticeship pro- 
gram was to give students an inside track to a better career. 

I want to share two stories about our apprentices with you. One 
is about Alonzo Washington and the other, Godfrey Pope. These 
two young men personify what this program is all about. I was in- 
troduced to Alonzo in late fall of 1991. He was extremely shy. Dr. 
McMillan asked me to consider Alonzo for our first apprenticeship. 
This was a pilot apprenticeship. 

Alonzo had just received one of the highest SAT scores in the 
system and wanted to be an engineer. He had a very difficult home 
life and was working at a fast food restaurant from after school 
until very late at night. I interviewed him and we hired him on De- 
cember 30, 1991. 

Within days of his arrival at Collins & Aikman, his manager m- 
formed me that Alonzo was special and that he had the aptitude 
to accomplish anything he wanted in the engineering field. He 
made an immediate positive impact on the department not only in 
productivity, but in the fact that everyone had an interest in seeing 
Alonzo succeed. 

Alonzo graduated high school in the spring of 1992 and entered 
Georgia Tech. He continues to work for us on breaks and in the 
summer and will be offered a position when he has graduated from 
college. My prediction is that we will have to make him an attrac- 
tive offer to get him because I think he will be heavily recruited 
by major companies everywhere. 

This next story is about Godfrey Pope. Godfrey, who was socially 
withdrawn and a below average student, attended one of "Inside 
Track's" senior leadership seminars. Afterwards, Godfrey took the 
seminar speaker (who happened to be CharUe Eitel, President of 
CoUins & Aikman) aside and told him he was inspired by the 
speech and wanted to know more about "Inside Track." 

I want to say something here. The mere fact this young man 
came forward to a speaker in front of 200 some kids was a miracle 
in itself and is a credit to the school system, but I want to continue 
by saying Godfrey became an obvious choice for the apprenticeship 
program at Collins & Aikman. He started work on November 4, 
1992, in our distribution area, and now has an OSHA-approved op- 
erator's license for lift trucks. 

One exciting note is that Godfrey made the honor roll his last se- 
mester at Dalton. He has now graduated and plans to attend col- 
lege and has a goal to become an electrical engineer. We have of- 
fered him the same employment opportunities as Alonzo. 

These two cases portray the importance and effectiveness of an 
apprenticeship program and how it can help both individuals and 

companies. . ^ j ttt i 

In closing, I want to tell you that we are most satisfied. We plan 
to grow this program. But, this program would not have been pos- 
sible without the cooperation of the Appalachian Regional Commis- 



109 

sion. We did not experience any of the bureaucratic red tape you 
hear so much about. In fact, I would hke to publicly commend the 
Appalachian Regional Commission and Carre Momingstar for their 
efficiency in handling our requests. We are expanding both inside 
and outside the carpet industry. 

A workplace readiness class will be added to the curriculum and 
we plan to study the possibihty of making this a year-round pro- 
gram. There are many more wonderful stories, but time prohibits 
me from sharing them today. I will be happy to speak further with 
anyone regarding our efforts. 

Thank you for this time and I will be happy to entertain ques- 
tions. 

Mr. Wise. Thank you very much, Mr. Whitener, particularly 
those personal examples. 

Next will be Ms. E. Kay Adams, Executive Director of the Uni- 
versity Industry Pubhc Partnership for Economic Growth from En- 
dicott. New York. 

Ms. Adams. Thank you, Mr. Chairman. I am Kay Adams, Direc- 
tor of UnlPEG, the University Industry F*ubhc Partnership for Eco- 
nomic Growth (UnlPEG) is a technology development organization 
that covers nine counties in the southern tier, and all of those 
counties are located in the Appalachian Regional Commission. I am 
also a member of the board of the Southern Tier East Regional 
Planning Board, one of the local Appalachian Regional Commission 
offices. 

I am very pleased to be able to provide this testimony today and 
I want to thank Congressman Boehlert, who has been a strong sup- 
porter of both the UnlPEG program and a strong supporter of the 
ARC program, and I thank him very much for his sumjort. 

As an example, the ARC programming provided $48 million to 
392 projects over the past 27 years through this single local deliv- 
ery agency, the Southern Tier East Regional Planning Board. This 
agency covers eight of our rural counties, was the instrument that 
supported these appUcations and made it possible for these funds 
to be utiHzed. 

The ARC program has proven the effectiveness of providing Fed- 
eral funds for the local economic development and the local eco- 
nomic development initiatives year after year. Five miUion dollars 
to $48 million was targeted for industrial effectiveness programs. 
As a direct result, this $5 milUon leveraged $25 milUon in local 
funds and effected 3,700 jobs; a five-to-one leverage on Federal dol- 
lars at a cost of $1,430 per job. And we are grateful for those jobs 
and the funds that you provided to us to allow us to leverage those 
jobs. 

During the 1980s, as the industry began to globally expand, the 
local marketplace changed to an international marketplace and 
that marketplace became one of fierce competition for scarce re- 
sources. At that same time the definition of vital infrastructure 
continued to change and the need to support industrial activities 
was expanded beyond the 1960's view of water, sewer, road and 
electricity to include telecommunications. The expansion moved for- 
ward until today telecommunications is viewed as one of the vital 
infrastructures of the 1990s. 



110 

This past thinking of local economic development was water, 
sewer, electric only. Even economic development professionals be- 
lieved that telecommunications were always provided by the phone 
company. All of that was pre-1985 divestiture. In 1985 the AT&T 
telecommunications system was broken up and split into what we 
now today know as the long-distance and the local network. The 
deregulation event and the current competition was not recognized, 
plus the fast changing technology was not recoghized until recently. 
Now these changes are beginning to take effect. 

In recognition of this paradigm, the STERPB organization boldly 
stepped forward and financially supported the development of a re- 

fional telecommunications planning study with ARC providing 
56,000 in support. We believe this is an example of high value use 
of ARC funds with the development of this particular strategy plan 
and an example of how these funds can support economic develop- 
ment through technology development in this region. 

The planning study was completed by a local consulting group, 
Northeast Networking, and they used a five month process where 
they conducted 60 face-to-face interviews, had 20 focus group ses- 
sions, and a semiweekly task force meeting of 10 of the counties 
in our region. That local support is an indication that this was not 
a report that was done at a desk by a telecommunications consult- 
ant that had no input fi-om the local region. This truly was an in- 
novative process that involved all of the counties and hundreds of 
people within the region. 

The study was undertaken to plan a comprehensive tele- 
communications strategy, and this strategy was to look at what 
could be provided, and we do have and have included in the testi- 
mony the summary of that strategy. 

We are looking at nine regional hubs proposed to interconnect 
community networks and support network traffic between the 
hubs. Fifteen rural access points connect networks within commu- 
nities and connect community networks to the regional backbone. 
Community networks connect hospitals, health, education, pubhc 
networks, and business locally and also provides access to the re- 
gional hub by means of the closest rural access point. In other 
words, any public or private regional entity would be able to con- 
nect into a single network that would carry information about our 
health care entities and our educational entities. 

The community networks that we envision would be viewed as 
local and they would provide access to the regional hubs by means 
of the closest rural access points. All of these services can be sup- 
plied by a variety of carriers. And we refrained, on purpose in our 
study fi-om pointing out what carriers might be used or not used. 
We decided that carriers should be up for competition and they 
should be competitive with each other, so we did not define tele- 
communications as cable TV or telecommunications as voice-only 
activation. 

As indicated, this planning study provided a road map for an 
open structure, of various networks, all capable of supplying the 
badly needed telecommunication system to our rural region. To- 
day's system provides basic two-wire telephone access to everyone 
but a very few residential customers, and during the 1960s this 



Ill 

two-wire service was adequate to fill the needs of the residential 
customer but today that is not true. 

The services today must be flexible, easy to access, complex high- 
speed data network. These ties are not available to more than 10 
percent of the 900 industrial companies in our southern tier and 
nine county regions. The telecommunications systems of today 
reaches only 5 percent of the homes with our high-speed data net- 
works. In specific, we only have one county out of our 10-county re- 
gion that has a telecommunications switch that is populated with 
ISDN software which would allow the expanded telecommuni- 
cations technology to be available to aU of the industries in the re- 
gion. This brings up the question of when will these services be 
available, who should supply the services, and how they can be 
made available to users? 

Our planning study is a good road map filled with possibilities 
and suggested solutions but, fi-ankly, the funds for the implementa- 
tion of these programs are not available. The various voice-only 
telecommvmications, cable TV, or private network developers re- 
sponsible for developing such networks are currently not willing to 
invest the funds required to develop these networks in our rural re- 
gion. 

The telecommunication need is there, but the expansion of this 
infi*astructure will not occur in the near future without financial 
investment. In addition, the lack of this infi*astructure continues to 
hinder the economic growth possibihties in our rural region, and I 
don't believe that we are unique in this problem. I beheve all the 
rural regions that are addressed here today would say that the 
same situation thing applies to them. 

On a statewide basis, New York has recognized that tele- 
communications is becoming one of the most vital pieces of their in- 
fi*astructure and they have established a telecommunications ex- 
change that is looking at key telecommunications issues affecting 
the economic growth of New York and seeking solutions for these 
issues. A working draft of this proposal is included in our testi- 
mony and it indicated that they are looking at industry, technology 
diffusion, infi-astructure, regulatory options, and pubhc sector ap- 
plications. 

Although the exchange is only 50 percent completed with their 
study at this time, as a member of this task force group the need 
for telecommunication infrastructure development has been clearly 
identified by everybody on the task force. It is a hope that future 
programs will become available to support the development of this 
telecommunication infrastructure, but until that occurs, the unmet 
needs exist, which brings us back to why we beheve that ARC 
funding is important. 

ARC funding can supply the same type of support for tele- 
communication needs they have provided for the other infrastruc- 
ture of the past. We believe that the need for ARC funding for tele- 
communication is definitely there today. 

As part of the solution for addressing that need, it is my hope 
ARC will continue to provide their funds to solve this problem. 
ARC support is vital and the path for moving forward towards a 
universal solution to this problem is unclear. Most certainly great 
States, industries, universities and private groups are all working 



112 

on finding a solution to these problems of today, but nothing ap- 
pears to be simple or fast. As long as this problem exists, the need 
for ARC support will exist. 

The hurdle of developing a flexible telecommunications network 
that will supply universal access to all appears as large as the past 
need for electrifying the United States. This time, we begin this re- 
building process with one of the best telecommunication infrastruc- 
ture bases in the world today, we just need to make that jump to- 
ward imiversal access for all. The ARC region deserves equal op- 
portunities and the ARC program is one way to help achieve these 
needed chansres. 

I would like to submit at a later time a study that we have found 
and are currently looking at within our region as a basis, that has 
been created in another section of the Appalachian region, in Ath- 
ens, Ohio, to be exact. It is a market-driven approach to flexible 
manufacturing networks pairing and it is currently being sup- 
ported out of the Appalachian Center for Economic Networks and 
it is a demonstration project that has been going on for the last 
four years. And this is a very successful project that indicates how 
Appalachian-type regions, in other words rural regions, have suc- 
ceeded and made available the job opportunities within that region 
and within that networking through the use of telecommunication 
networks. 

We would like to reiterate something that was said by Lmda, 
and that is that matching the needs of local interests with a Fed- 
eral program's express desires is one of the basic ways ARC pro- 
vides support to the regions that they currently cover. We believe 
this program is very worthwhile, we would like to see this con- 
tinue, and we would like to see telecommunications expanded as 
one of our vital pieces of infrastructure. 

Thank you for your time and allowing us to address you. 

Mr. Wise. Thank you, Ms. Adams. 

Our final witness will be the Honorable James W. Robinson, 
Chairman of the Virginia Board of Housing and Community Devel- 
opment from Poimd, Virginia, and I just might note, Mr. Robinson, 
I have a warm spot in my heart for you, as does anyone who has 
represented Wise County in the Virginia legislature. 

Mr. Robinson. Thank you, Mr. Chairman, and members of the 
committee. It is a pleasure to be here to represent the Appalachian 
region and the coalfield area of Virginia. 

Since my remarks are already a part of the record, I will not 
read those over, but I would like to summarize a portion of them. 

As I said in my written remarks, I am Chairman of the Virginia 
Housing Community Development Authority, which disburses all of 
the funds, the ARC funds, in Virginia. I am also Chairman of the 
Virginia Coalfield Economic Development Authority. It is a seven 
county regional development authority for the seven most extreme 
western counties in Virginia. These counties border Tennessee, 
Kentucky and West Virginia, and I might add they are further 
away from our State capital in Richmond than seven other capitals 
in the United States. We are closer to seven other capitals. 

The Coalfield Economic Development Authority is the only re- 
gional authority in Virginia that has taken the regional approach 
to industrial development. It was created under legislation passed 



113 

in Virginia under the administration of Governor Baliles. It set up 
a local, a regional board that consists of members from the seven 
counties: Three boards of supervisors that produce the most reve- 
nue to the authority, five businessmen, two regional directors, a 
total of 13, and it gives a wide board for the seven county area. 

We are approaching to attract industry in a regional area and we 
have been very successful. We are funded by a quarter of 1 percent 
of coal severance tax that comes from the production of coal in the 
seven county area. This brings us in roughly $3 miUion a year to 
use along with ARC and other State fundfs in a partnership to at- 
tract industry into the area. 

Our approach has been into marketing and also development of 
industrial parks. We have created two regional parks in the region 
to take care of the seven county areas. One of the regional parks 
that I mentioned in my written remarks is already — it started in 
1969. We have already created over 1,400 jobs in that park. It has 
brought in some $50 million in funds into the private area, along 
with the funds we have used from ARC and local funds to develop 
the infrastructure in these two parks. 

The other park we only created in 1989. It is in the eastern re- 
gion of the seven county area, in Lebanon, Virginia, and it has only 
been active for three years and we have already got approximately 
700 jobs into that area. So you can see we are using ARC funds 
along with local funds and State funds to help the economy in the 
area. 

Those two regional parks are just a few of the things that we feel 
we have accomphshed in the area. We have attracted a furniture 
factory employing 250 people now. We have entered into an agree- 
ment through our local revolving loan fund to double the size of the 
factory, which is almost complete, and it will increase the employ- 
ment to roughly 500 people. 

We let a unique contract with AT&T. We are one of the few re- 
gional impaired hearing operator centers. We are operating it for 
the whole Commonwealth of Virginia alone and do weekend work 
for three other States, which I tMnk Kentucky is one of the States 
I think we service on the impaired hearing center. This employs 
right now close to 200 people. 

We are constantly working to attract industry to improve the 
area, and we are making a difference in the area, we feel. And with 
the help of the Commonwealth of Virginia and ARC, we will restore 
the economic viability of the area and improve the quahty of life 
of the people of southwest Virginia. We feel we are making a dif- 
ference. 

I thank you very much for allowing us to speak on behalf of ARC 
today, and if you have any questions I will be glad to answer them. 
Thank you. 

Mr. Wise. Thank you very much, Mr. Robinson. I greatly appre- 
ciate your testimony. 

Let me just ask a brief question of Commissioner VanKirk. In 
the construction of an ARC highway, are you complying frilly with 
the Department of Transportation procedures for constructing high- 
ways and all the environmental regulations, DOT regulations, and 
all that must be complied with in a normal Federal Highway Ad- 
ministration project. 



114 

Mr. VanKirk. Absolutely. The development highway system 
under ARC is administered through the Federal Highway Adminis- 
tration. We follow all of the guidelines and regulations that apply 
to any highway in the United States. 

Mr. Wise. Is there a matching requirement for the State? 

Mr. VanKirk. Currently, the matching on all highway programs 
is 80-20; 20 percent matching on behalf of any State. 

Mr. Wise. So an ARC State building or constructing an ARC 
highway must meet the same match as it would for any other high- 
way of the Federal Government? 

Mr. VanKirk. Absolutely. 

Mr. Wise. Mr. Boehlert. 

Mr. Boehlert. Thsmk you, Mr. Chairman. I want to thank all 
the witnesses for their excellent testimony, and I want you to know 
I am one Republican who fought all the way during the RepubUcan 
years when they tried to eliminate funding for ARC because I think 
it is a very good program. 

And as you observed, Mr. Chairman, in your comments, our peo- 
ple like to live where they are. They want the opportunity where 
they are because of the quality of life, if they can earn their way. 

And Kay Adams, thank you so much for the great work you are 
doing. Talking about telecommunication infrastructure of America, 
that is a great unmet need and we are leading the way in this de- 
velopment in New York and I thank you for what you are doing. 

Mr. Robinson, you are driving me crazy. I can't name the seven 
State capitals that you are closest to. Would you help me out? 

Mr. Robinson. Well, we will start off with West Virginia. 

Mr. Boehlert. Got that. 

Mr. Robinson. Ohio. 

Mr. Boehlert. Got that. 

Mr. Robinson. Tennessee. 

Mr. Boehlert. Got that. Kentucky. 

Mr. Robinson. Georgia. 

Mr. Boehlert. Georgia. 

Mr. Robinson. We are closer to Atlanta than we are Richmond. 

Mr. Boehlert. That is the one I had trouble with. All right. 

Mr. Wise. Will the gentleman 5deld on just that point? 

Mr. Boehlert. Sure. 

Mr. Wise. Because if I had my way, of course, back in the recent 
unpleasantness of the 1860s, the line would have been drawn a lit- 
tle different and you would have been where you should have been, 
with the capital in Charleston. 

Mr. Robinson. Mr. Chairman, my ancestors came from that sec- 
tion that is now West Virginia. 

Mr. Boehlert. Yes, West Virginia was formed because you were 
with the good guys; right? 

Mr. Wise. Well, we won't get into that history. 

Mr. Boehlert. We are talking about the unpleasantness of the 
1860s. Isn't that reedly the reason why Virginia was partitioned? 

Mr. Wise. It was where Abraham Lincoln drew the line, and he 
did not see the wisdom of keeping Wise County where it should 
have been; that is correct. It may also have been the place where 
somebody stopped the treaty, I am not sure. 



115 

Mr. BOEHLERT. Ms. Gayheart, your testimony was heart wrench- 
ing, because it is a story that exists and we don't like to accept the 
fact of the high rate of unemployment and youngsters leaving and 
never wanting to come back. 

If you were prioritizing, obviously you would like us to approve 
more money for ARC, I can understand that, but if you had your 
wish list, the top couple of priorities for funding in your area for 
next year, what would those two items be? 

Ms. Gayheart. I think I can speak on behalf of the citizens that 
worked with us this past year, jobs, leadership development and 
that surprised me. lam pleased that people understand the need 
for good leadership and are going to demand that. 

Mr. BOEHLERT. But if you were to submit applications to ARC for 
funding projects, what would the two projects be if you had your 
top two priorities, you don't submit an application for jobs broad 
category. 

Ms. Gayheart. Probably a telecommunications system would be 
one, which would create jobs. 

Mr. BOEHLERT. So you identify with Ms. Adams' testimony. 

Ms. Gayheart. Oh, yes. We are working now trying to develop 
a telecommunications system. Also, jobs. Some type of job develop- 
ment in the wood industry. We see that as a potential. We would 
probably do solid waste. Those would be the three I would go for. 

Mr. BOEHLERT. Okay. 

As I look at what we have had, Kay, the last year in New York, 
one, it was not a heck of a lot of money. Of course, there was not 
a heck of a lot of money to go around, and most people are sur- 
prised when you talk about New York being ARC, they don't think 
we could identify with ARC problems, but we do. 

If I asked you the same question about your top priorities, what 
would the top two be for you? 

Ms. Adams. Well, I would have to say telecommunications again. 
We believe that we have made inroads in our other infrastructure 
and that telecommunications are now a real basic infrastructure 
need and is one of the lacking in our rural area. As I indicated, out 
of our 10 counties there is only a single county that has ISDN soft- 
ware. 

Mr. BOEHLERT. Tompkins Coimty. 

Ms. Adams. Tompkms County because of the supercomputer. If 
Cornell was not located in Tompkins County, we would not have 
that. 

And thank you very much for the supercomputer, I appreciate 
that. Trust me, I am not complaining. I just meant that in my re- 
gion we do not have that capability. So I think telecommunications 
would be my first. 

I would promote very much the health care networking that is 
going on and I see that as another basic need for our area, that 
must continue to develop. We have been supporting the develop- 
ment of these networks and working together with the doctors of 
the rural community hospitals. Bassett is one of the hospitals that 
is considering the establishment of a telecommunication network. 

Mr. BOEHLERT. The Bassett Hospital is magnificent. 



116 

Ms. Adams. They are an applicant for ARC funding right now to 
become a networking facility. I am very interested in seeing that 
expginsion take place. 

Again, I feel that we can never have enough of the funding for 
sewer or the hazardous waste problems. ARC funding remains key 
in that direction also. 

Mr. BOEHLERT. Thank you very much. Thank you, Mr. Chair- 
man. 

Mr. Wise. I thank you, and I would like to just state to Ms. 
Adams and to all those that Mr. Boehlert is a tireless Representa- 
tive on behalf of the ARC. What I appreciate about him is not only 
his work in Congress but also his previous work. He knows not 
only about the ARC and the EDA but he knows how to make them 
work. I'm looking forward to working with you as we move towards 
authorization. 

The gentleman from Georgia is also new on the committee but 
I am happy to say a great advocate for the ARC as well. 

Mr. Deal. Thank you, Mr. Chairman. I would just like to express 
my appreciation to all the members of the panel, and especially to 
Mr. Whitener from my district, who has brought to light some of 
the himian elements of trying to get people who are in a district 
that need more job opportunities, and I appreciate all of yoxir being 
here today. Thank you. 

Mr. Wise. Thank you. And the gentleman from Florida, Mr. 
Mica. 

Mr. Mica. Thank you, Mr. Chairman. I am also new on the com- 
mittee and not that familiar with the ARC, but I am going to take 
a half day during the recess, July 5th and visit Ms. Adams in Endi- 
cott, New York, and see what she is doing during the recess. So I 
will be able to report back to the committee on what I find. She 
didn't know that but 

Ms. Adams. No, but I welcome it. 

Mr. Mica. She will have a visitor that week. 

Ms. Adams. Would love to have you. Thank you. 

Mr. Wise. We look forward to that report. I would ask Congress- 
man Boehlert whether you will stamp his visa? 

One time I had a Member tell me I was permitted in the District 
but to be out by sundown. 

Now, with Mr. Mica, we do look forward to that, because I think 
what she is talking about is important and significant for many re- 
gions of our country. 

Mr. Franks. 

Mr. Franks. Mr. Chairman, as a new member, it was an enlight- 
ening discussion for me. Thank you very much. 

Mr. Wise. Thank you for your attendance. 

I want to thank all the witnesses. Since I had my editorial com- 
ment earUer, following Ms. Gayheart's remarks, I will refrain ex- 
cept to say I want to thank you for testifying to a broad range of 
what the ARC does. I am struck by the fact that many of you in 
your own ways have mentioned telecommimications. What I think 
that does is to reflect the changes that the entire Appalachian re- 
gion is going through and, indeed, that the ARC needs to keep up 
with those as well. 



117 

The indication is, whether it is telecommunications or soHd waste 
disposal or whatever it is, that the ARC is meeting those needs but 
there are some things that can be done in the authorizing legisla- 
tion to assist that and promote it. Certainly in my region of the 
country, telecommunications has become essential with the advent 
of fiber-optic cable and the decision made to make West Virginia 
one of the most wired for fiber optic in the country. We are begin- 
ning to see some benefits come from that. That is something that 
brings hope to those areas that have seen the decline in employ- 
ment from traditional industries. 

At any rate, I want to thank you. The subcommittee will be mov- 
ing forward on authorizing language. We will be working on that 
this summer, and I would greatly welcome your thoughts that you 
may have at any time, either through contacting your Representa- 
tives that are represented here or simply contacting the sub- 
committee directly if you don't have someone who is on the sub- 
committee. But each of you has a wealth of experience and we ap- 
preciate your sharing it with us. 

If there are no further comments, then I declare the hearing ad- 
journed. 

[Whereupon, at 12:10 p.m., the subcommittee was adjourned.] 



PREPARED STATEMENTS SUBMITTED 
BY WITNESSES 



House of Public Works Committee 

Subcommittee on Economic Development 

Room 2167 

RAyburn House Office Building 

Washington, D.C. 



June 22, 1993 
10:00 AM 



Reauthorization of the 
Appalachian Regional Commission 



Testimony of E. K. Adams 

Executive Director 

University Industry Public Partnership for Economic Growth (UnlPEG) 

1310 North Street 
Endicott, NY 13760 

June 17, 1993 

(119) 



120 



House Public Works Committee 
Subcommittee on Economic Development 



Honorable Members, 

It is with great enthusiasm that we provide this testimony addressing the re-authorization of the 
Appalachian Regional Commission (ARC) program. 

As an example, this program has provided over $48 million to 392 projects over the past 27 
years from one local delivery agency called the Southern Tier East Regional Planning Board 
covering eight (8) rural counties in the Southern Tier of New York. 

The ARC program has proven the effectiveness of providing federal funds for the support of 
local economic development initiatives year after year. $5 million of the $48 million was 
targeted for industrial infrastructure programs. As a direct result, this $5 million leveraged $25 
million in local funds and effected 3,700 jobs - a five to one leverage on federal dollars or a 
cost of $1 ,430 per job. We are very grateful for these funds and the resulting jobs. 

During the 80' s, as the industries began to globally expand, the local marketplace became one 
of fierce competition for scarce resources. At the same time, the definition of vital 
infrastructure needed to support industrial activity was expanded beyond the 60's view of water, 
sewer, road and electricity to include telecommunications. This expansion has moved forward 
until, now , telecommunication is viewed as the vital infrastructure of the 90's. The past thinking 
of economic development was water, sewer, and electric only. Telecommunications was always 
provided so was thought of as pre- 1982 divestiture. De-regulated competition was not 
recognized and the fast changing technology was not recognized until recently - now, changes 
are beginning. 



121 



As Governor Jones indicated in his earlier testimony, ARC funds are a way for regions to work 
themselves out of poverty and provide these areas with the tools to become economically stable. 
We believe that local selection of programs to use ARC funds is a key part of the success of this 
program. 

In recognition of this new paradigm, the STERPB organization boldly stepped forward and 
fmancially supported the development of a Regional Telecommunication Plan using $56K of 
ARC funds. This project is a shining example of the "high use" value ARC funds supplies to 
the economic development environment in our region. This planning study was completed by 
the Northeast Networking consulting group and, using a five (5) month process of sixty (60) face 
to face interviews, over twenty (20) focus group sessions and semi-weekly task force meetings 
across ten (10) counties over a period of six (6) months, our Regional Telecommunications Plan 
was developed. 

This strategy was identified as a way to provide needed planning for the development of the 
telecommunication structure we believe is needed to provide rural counties with equal economic 
development opportunities. 

This study was undertaken to plan a comprehensive telecommunication strategy for the Southern 
Tier of New York and the results identify the following network proposal. Nine (9) regional 
hubs are proposed to interconnect community networks and support network traffic between 
hubs. Fifteen (15) rural access points connect networks within communities and connect 
community networks to the regional backbone. Community networks connect hospitals, schools, 
government agencies, and businesses locally and also provide access to the regional hub by 
means of the closest rural access point. All of these services can be supplied by a variety of 
carriers. We refrained from defining carriers on purpose! 

As indicated, this planning study provides a road map for an open structure of various networks, 
all capable of supplying the badly needed telecommunications system to our rural region. 
Today's system provides basic two wire telephone access to everyone but a very few residential 
customers. During the 60's, this two wire service was adequate to fill the needs for our 



122 



industrial companies, but now that is not true. 

The services required to do business in today's global marketplace must be flexible, easy to 
access, complex, high-speed, data networks. These ties are not available to more than 10% of 
the 900 industrial companies in our Southern Tier telecommunication system of today and to 
only 5% of the residential homes. In specific, only one county, out of our ten county region, 
has a telecommunication switch that has ISDN software. This brings up the question of "When 
will these services be available, who should supply these services, and how can they be made 
available to all users?" 

Our planning study is a good road map filled with possibilities and suggested solutions but, 
frankly, the funds for the implementation of these programs are not available. The various voice 
only telecommunication, cable TV, or private network developers responsible for developing 
such networks are currently not willing to invest the funds required to develop these networks 
in our rural region. 

The telecommunication need is there but the expansion of this infrastructure will not occur in 
the near future without financial investment. In addition, the lack of this infrastructure continues 
to hinder the economic growth possibilities in our rural region. 

On a statewide basis. New York has established a "Telecommunications Exchange" that is 
looking at key telecommunication issues effecting the economic growth of New York and 
seeking solutions for these issues. A working draft of proposals under consideration by this 
exchange was discussed at a full day seminar June 17, 1993. The overview supplied here 
identified five (5) major areas for study: 

n TFJ.KrOMMUNICATTONS - BASFD INDUSTRY 

Business User Needs 

Draft ISDN Recommendation 

The Telecommunications-Economic Development Link 

Economic Impacts of Regulatory and Tax Policies 



123 



2) TECHNOLOGY DIFFUSION 

- Vision/Basic Goals 

- Quality of Life 

- Social Equity and Access 

- Technology Diffusion 

3) Infrastructure Technology and Investment 

- Relation to Federal Policies 

- Consensus on Network of Networks, Importance of Interconnection & Interoperability 

Standards 

- Customer Premise Equipment 

- Infrastructure and Investment Objectives 

- Market (Demand) Driven and Policy (Supply) Driven Infrastructure Approaches 

4) Regulatory Options 

- Telecommunications Market Framework 

- Basic and Universal Service/ Access 

- Unified Regulatory Process, Structures and Standards 

- Tax Issues 

5) Public Sector Applications 

- Vision 

- "Public Sector" Definition and Strategy for Inclusion 

- Interconnectivity and Interoperability 

- Network Modernization Incentives 

- Relation to Public Networks/Investment Leverage/Economic 



Although the exchange is only 50% completed with their study, as a member of the supporting 
Task Force group, the need for telecommunication infrastructure development has been clearly 
identified. It is a hope that future programs will become available to support the development 
of this telecommunication infrastructure but, until that occurs, the un-met need exists, which 
brings us back to why we believe ARC funding is important. 

ARC funding can supply the same type of support for telecommunication needs that they have 
provided for other infrastructure in the past. We believe the need is there. 

As part of a solution for addressing that need, it is my hope that ARC will continue to provide 
their funds to help solve these needs. ARC support is vital and the path for moving forward 



124 



towards a universal solution to this problem is unclear. Most certainly, great states, industries, 
universities, and private groups are all working on finding a solution, but nothing appears to be 
simple or fast. As long as this problem exists, the need for ARC support will exist. The hurdle 
of developing a flexible telecommunication network that will supply universal access to all 
appears as large as the past need for electrifying the United States . But, this time we begin with 
one of the best telecommunication infrastructure bases in the world today; we just need to make 
that jump toward universal access for all. The ARC region deserves equal opportunites. The 
ARC program is one way to help achieve these needed changes. 

I would like to submit, at a later time frame, a copy of supporting documentation on one of the 
existing programs that is successfully operating in Athens, Ohio concerning Flexible 
Manufacturing Networks. 

Thank you for your time and for allowing me to address you today. 



125 



Southern Tier East 

Regional Planning Board 

(Summary) 



126 



ARC IN THE SOUTHERN TIER EAST REGION OF NEW YORK STATE 



For over twenty-five years, the Appalachian Regional Commission (ARC) has been a critical 
provider of development assistance throughout the fourteen Appalachian counties along the 
Southern Tier of New York State. ARC assistance is administered in this area through the 
oversite of the Governor of the Slate of New York and the New York Sute Department of State. 
In addition, the fourteen counties in the Southern Tier are divided into three regional planning 
areas (Southern Tier East, Southern Tier Central and Southern Tier West) governed by Regional 
Planning Boards formed under the New York State General Municipal Law. These Regional 
Boards are comprised of elected and citizen representatives from each of the counties served by 
the Boards. These Regions were designated by New York State and the Appalachian Regional 
Commission as Local Development Districts to provide the grassroots planning and priority 
setting which were deemed to be essential for the ARC investment process. 

The following comments focus on ARC investments in the Southern Tier East Region and in 
particular, on investments directly affecting economic development. The comments are meant 

to be illustrative only. / 

/ 

Background Geography • Southern Tier East Region 

The Southern Tier East Region or Local Development District (LDD) is comprised of eight 
counties: Broome, Chenango, Cortland, Delaware, Otsego, Schoharie, Tioga and Tompkins. 
This area encompasses almost 6,200 square miles and includes 5 cities, 130 towns, 57 villages 
and 71 school districts. The 1990 population for the Region was 598,926. With the exception 
of the urbanized area in Broome County, the Region is predominantly rural. The Region is 
blessed with cultural and physical diversity ranging from the Finger Lakes area in the west to 
the Catskill area in the east. 

ARC INVESTMENTS 

According to the New York State A ppalachian Development Plan 1991-1994. prepared by the 
New York State Department of State, ARC - during the period from 1966 to 1990 - invested 
$48,753,643 in 392 Area Development Projects in the Southern Tier East Region of New York 
State. This funding provided badly needed assistance for implementing physical infrastructure 
improvements - often tied to economic development initiatives (e.g., water and sewer extensions 
to industrial sites), enterprise development (e.g., business incubators), job-training, basic skills, 
employer-supported day care and other child development activities and rural health care. 
Additional investments have been made over the past few years. Given the history of ARC 
investment in the Region and the extent of those investments affecting communities across the 
Region, it is those investments affecting communities across the Region, it is probably safe to 
say that today there are few people or areas in this region which have noJ been impacted in some 
way by the ARC program. 

Examples of the kinds of investments made by ARC affecting economic development over the 
years in this Region include: 



127 



Tio ga County Farm Infrastructure (1986) - ARC supported water and sewer extensions to an 
industrial site north of the Village of Owego in Tioga County. The $2,000,000 financing 
package, which included assistance from economic Development Administration and the New 
York State Regional Economic Development Partnership Program allowed the development of 
a major electronics assembly operation creating between 300 to 400 new jobs. 

South Central Livestock Program (1981-84) - Multi-year funding to the South Central New York 
Resource Conservatjon and Development Council (RC&D) to implement a rcgionwidc 
demonstration program for promoting quality beef and sheep production through more efficient 
grassland management. This project exemplifies the broad public-private partnership approach 
to project development and implementation encouraged by ARC. In addition to ARC. this 
project involved the participation of the U.S. Department of Agriculture, The NYS Department 
of Agriculture and Markets. Heifer Project International Farmers and rural resident producers 
and local agribusinesses. The program began with a small number of participating producers 
producers scattered over an eight county area and now numbers 1 , 100 producers over an eleven 
county area served by the RC & D. 

Broome Industrial Incubator (1978) - one of the nation's first industrial incubators, this project 
received $100,000 in ARC assistance matched with over $4.5 million in other funding. As of 
1991, the facility wzs still operating successfully with five tenants employing 36 people. A total 
of 15 firms employing 650 people had graduated successfully, since the facility b^an operations 
in 1979. 

Other Industrial Deveionmeni Projects - ARC has a long history in the Region of supporting 
infrastructure improvements, access roads, site development and so forth in support «rf industrial 
development projects leading to the direct creation and/or retention of private sector 
employment. Attached to this statement is a summary listing of ARC Assisted Industrial 
Development Projects funded by ARC in the Southern Tier East Region through 1989. As the 
list reveals, twenty-five projects received a total of $5,282,488 in ARC assistance. Each dollar 
of ARC assistance on these projects levered almost 5 dollars in other fiinding. In addition, 
employment associated with these projccu as of 1991 was almost 3,700, resulting in an ARC 
Per Job Cost figure of just $1.430! 

Strategic Telecommunications Initiative (1992) - This is a recently funded effort in which ARC 
has provided a grant of $56,000 for the development of a strategic telecommunicationj plan 
aimed at addressing the economic development, health, education and governmental needs in the 
eleven county Southern Tier East and Southern Tier Central Regions of Appalachian New York. 
This project funding by ARC is a prime example of the unique role ARC has played and 
continues to play in offering a source of assistance to support new initiatives and technologies. 
Similar to ARC support in recent years of elder care, the funding of this project by ARC 
recognizes the timeless and immediacy of need with regard to the rapidly expanding field of 
telecommunications and its critical relevance for future development. As with most ARC 
assisted efforts, this project has focusscd on building regional support and consensus from the 
ground up. Local focus groups comprised of representatives from industry, healthcare, 
education, small business, agriculture and government have played a vital role in identifying 
local area needs. In addition, a regional committee was established to provide overall direction 



128 



for the development of a regional strategic plan. 

Lx)cal Development District Planning (ongoing) - in addition to funding specific projects, ARC 
also provides planning grant support to the Southern Tier East Regional Planning Development 
Board as a Local Development District for the ARC Program. This assistance, matched by 
member county contributions, helps to maintain a professional staff to provide direct planning 
and project development assistance to communities and organizations throughout the eight county 
region. The District annually updates its Appalachian Development Plan and coordinates this 
regional planning effort with other local, state and regional development programs. Since the 
late 1970's, the Regional Board has had an Economic Advisory Committee comprised of 
representatives from other state, local and regional economic development agencies or 
organizations. Such organizations as the New York State Department of Economic 
Development, county industrial development agencies. UnlPEG - the Southern Tier's regionally 
designated Indusuial Technology Council, and others actively participate on the committee. 
These individuals provide direct input to the development of the Region's economic development 
goals and objectives and assist in setting annual priorities for projects seeking ARC assistance. 

CONCLUDING COMMENTS 

ARC has been a driving force *much of the development in this Region for over 25 years. 
Today, there are rural health clinics, home health care programs, child care programs, 
educational and cultural facilities, industrial parks and many other developments across this 
region which owe their existence to ARC assistance. As some of the information presented here 
testifies, literally thousands of jobs have been impacted in this Region alone by ARC investments 
and at very low cost. ARC seems unique among government programs for a variety of reasons, 
including: 

Its reliance on state and local priority setting. 

Its encouragement of grassroots planning and involvement in the development process. 

Its recognition that human development and economic development are not mutually 
exclusive concepts. 

Its willingness to support innovative and exploratory approaches to social (e.g. . employer 
supported day care and elder care) and economic issues and problems (e.g., 
telecommunications, technology transfer). 

Its support and encouragement of strategic development planning within a regional 
context, involving the cooperative participation of federal, state, local, public and private 
entities. 

Its commitment to leveraging other resources for more cost effective project 
development. 



129 



Pa0« No. 
02/14/91 



YEAR PROJECT 



SOUTHERN TIER EAST REGION 
ARC ASSISTED INDUSTRIAL DEVELOPMENT PROJECTS 

CA42: INUSTRY DBF , INDUSTRY .FRM] 



LOCATION 



ARC 
FUNDS 



TOTAL TOTAL 

FUNDS JOBS 

AFFECTED 



1977 KIRKWOOO INDUSTRIAL T. OF KIRKWOOO 
PARK DEVELOPMENT (BROOME) 



1978 BROOME INDUSTRIAL 
INCUBATOR 

1981 TOWN OF KIRKUOOD 
INDUSTRIAL WATER 
SUPPLY 



139000 
100000 
T. KIRKUOOD (BROOHE) 414667 



V. JOHNSON CITY 
( BROOME ) 



1981 DEPOSIT INDUSTRIAL V. DEPOSIT (BROOME) 167000 
BLDQ. PROJECT 

1984 BROOME COUNTY IDA T. CONKLIN (BROOME) 372690 
(CORPORATE PARK OEV ) 



1985 LIBERTY ST. RAILYARC C. BINGHAMTON 
INDUSTRIAL SITS (BROOME) 



IBOOOO 



1985 DEPOSIT INDUSTRIAL V. DEPOSIT (BROOME) 166320 
WATER 



1986 DEPOSIT SANITARY 
8EUER 



1989 BINGHAMTON ( D & H ) C. BINGHAMTON 
RAIL LAND (SRCOME) 

ACQUISITION 



V. DEPOSIT (BROOME) 150000 
142800 



1989 CHENANGO AIRPORT 
INDUST. PARK 
INCUBATOR 

1979 WICKWIRE (NOSS) 
INDUSTRIAL PARK 

1985 PORT WATSON IND. 
PARK (.Zmmmt Steal 
Site) 

1977 SIDNEY AIRPORT 
INDUSTRIAL PARK 



T. NORTH NORWICH 
( CHENANGO ) 



C. CORTLAND 
(CORTLAND) 

C. CORTLAND 
( CORTLAND ) 



ISOOOO 

286000 
318265 



V. SIDNEY (DELAWARE) 438120 



492388 
454718S 

622000 

211309 
3600000 
360000 
332640 
4070O0 
28S600 

600000 



546 
36 



32 

607 

140 

110 

20 





1979 HOBART INDUSTRIAL V. HOBART (DELAWARE) 10942S 
PARK - PHASE 2 



387114 


65 


676865 


79 


6476S0 


114 


163922 


177 



130 



P«9« No. 

02/14/91 



YCAft PROJECT 



SOUTHERN TIER EAST RESIGN 
ARC ASSISTED INDUSTRIAL OCVELOPHENT PROJECTS 

[A*2 ! INUSTRY .08^ , INDUSTRY .FRM) 

LOCATION ARC 

FUNDS 



TOTAL TOTAL 

FUNDS JOBS 

APFECTEO 



1979 UAL TON INDUSTRIAL V. WALTON ( DELAWARE ) 145«68 
PARK 

1989 H08ART WASTEWATER V. HOBART (DELAWARE) ISOOOO 
SYSTEM 

1981 PONY FARM INDUSTRIAL T. ONEONTA (OTSEGO) 313750 
PARK 



1983 SCHOHARIE COUNTY 
INDUST. SITE 
DEVELOP. 



V. COBLESKILL 
( SHOHARIE ) 



1987 CEMENT PLANT SITE T. COBLESKILL 
IMPROVEMENTS (SCHOHARIE) 

1987 TIOISA COUNTY FARM T. OUEGO (TI06A) 
PROJECT 

1986 UAVERLY WATER k T. BARTON (TIOQA) 

SEUER (EXPRESSWAY I. 
P.) 



34874 

100000 
IfiOOOO 
107500 



1976 TOMPKINS COUNTY T. LANSIN9 

INOUST. PARK WATER (TOMPKINS) 



1979 CHERRY ST. 

INDUSTRIAL PARK 



1981 AIRPORT INDUSTRIAL T. LANSING 
PARK UATER (TOMPKINS) 



394000 

C. ITHACA (TOMPKINS) 394000 
337283 



1985 INCUBATOR BLD6. 
IMPROVEMENTS 

»*> Total «»« 



T. LANSING 
( TOMPKINS ) 



25126 



222706 
2097000 
1206782 
1790000 

2022OO 

2000000 

332000 

684950 

684950 

2299783 

49753 



6 
177 
294 
400 

54 

480 
50 


111 

lie 

60 



^28^88 24,99^797 3695 



131 



Southern Tier 
Telecommunication Planning Study 



132 




Strategic 




LUUU 



Initiative 



Prepared for the New York State 
Southero Tier East Regional Plannifig Development Board and the 
Southern Her Central Regional Planning and Development Board 



April 1993 



/jfomHEAST 

msTwomaNO 

enMxm Aim tbit WW 



133 

SlKAIliGIC TELECOMMUNICATIONS iNrnAlTVE 



Executive Summaiy 



The Strategic Telecommunications Initiative (STI) is a plan to 
design and implement a comprehensive telecommunication strategy 
for the Southern Tier of New York. 

Specifically, the STI objectives are to design a telecommunication 
network and articulate an implementation strategy addressing the 
economic development, healUi.carc, educational, and governmental 
needs in the region. 

The goals are to increase productivity and cost efficiencies, improve 
the quality of public services, and stimulate economic growth. 

The economic development strategy of attracting new business and 
industry has often failed in the past because companies were not 
given the proper inducement to relocate, or stay. Correct incentives 
include a properfy skilled workforce, training/retraining 
opportunities for workers, and an existing telecommunication 
infrastructure to support quick and easy information access and 
exchange. 

Research supports the contention that an enhanced telecom- 
munication capability by itself does not promote rural ec<mcHnic 
development Such an initiative can onfy be successful if the right 
issues are examined in the right context The STI plan is a 
pragmatic approach to the design and implementation of a network 
in the Southern Tier. 

Section I • Strategic Teleconwtunieations Initiative explains die project 
background and the work of the coordinating committee and 
subregional focus groups. More than 130 individuals from the 11 
counties, representing health care, education, business, government 
and service providers, participated in six subregional focus group 
sessions and helped to formulate the general design requirements: 



Northeast Networking 



134 
Straihoic Telecommunications IwrnATiVE 

• Network capabilities 

• Global access 

• Training and technical support 

• Accessibility 

• Cost-effectiveness 

• Reliability 

• Security 

• Ownership 

• Growth 

• Regional and local initiatives 

• Universality 

Section. II • Telecommunication Technologies Today paints a picture of 
telecommunication technology trends, reports, national networks, 
and initiatives in other states. Information presented here focuses 
on what's happening in telecommunications and what other people 
are thinking and doing about it 

Section III - Conceptual Network Design gets to the heart of the 
matter by identifying key components of the design. 

Nine regional hubs are proposed to interconnect community 
networks and support network traffic between hubs. Fifteen rural 
access points connect networks within communities and connect 
community networks to the regional backbone. Community networks 
connect hospitals, schools, government agencies, and businesses 
locally and also provide access to the regional hub by means of the 
closest rural access point 

Section IV- Implementation Strategy documents the systematic 
approach used to develop the implementation plan. Based on 
information from the project coordinating committee, the 
subregional focus groups, other networks and initiatives, interviews, 
and research, the overall strategy is presented in three steps: key 
findings, issues and strategies, and the implementation plan itself. 

Key findings and strategies appear on the following pages. 



Northeast Networking 



135 

STRATCGIC '^BLECO^fM^NlCA•^ONS iNl-nATTVE 

Key Findings 

• Local community involvement is a critical component ofsucces^U 
implementation. 

• For the most part, people are unaware of the potentials of 
communication technologies. 

• Applications must be defined more specifically. 

• Many telecommunication networks and Initiatives already exist. 

• Real and perceived regulatory restraints have impeded creativity. 

• A considerable amount of telecommurUcation infrastructure is in 
place today In the ll-county region. 

• There is no shortcut to implementing a strategic telecom- 
munications plan in the Southern Tier. 

• There is no focal point or coordinating entity here (or elsewhere in 
the stale) that can carry out a strategic plan for the Southern 
Tier. 

• Interest in expanding telecommunications in the Southern Tier 
continues to grow. 



Northeast Networking 



136 
Strategic Tfuxommunicahons Initiative 
Implementation Strategies 



The development ofeompatibU, common-access points and dusters 
of users on community networks shouid provide incentives for 
Informed implementation efforts. 

The overall role oflocaly state, and federal governments should be 
one of leadership and coordination. 

Existing and planned private'Sector infrastructure investments 
should not he jeopardized by public construction and ownership of 
a network in the Southern Tier. Telephone and television cable 
companies shouid play prominent roles in ownership and 
operation. 

Telecommunication initiatives should be encouraged and 
supporud as long as they are consistent with the STI overall 
design strategy. 

Network engineering of the regional hubs and rural access points 
should be developed by a design team composed of representatives 
from the telephone industry, cable TV industry, government, 
education, health care, and business. Such participation in the 
design will help to establish standards and protocols both for users 
and service providers. 

Close coordination with the Telecommunications Exchange and 
major existing networks, such as Empire Net, SUNYNet, TNT, and 
NYSERNet, helps to ensure that the Southern Tier will be able to 
support connections to the rruijor networks. 

Once user needs, applications, and engineering specifications are 
defined more clearly, effort must be made to seek regulatory reUef 
in areas of conflict and to create a testbed that will drive 
regulatory change statewide. 

The currently established regional coordinating committee should 
continue the initiative and provide overall direction. 



Northeast Networking 



137 

Strategic Tfi proMMUWiCATioNs iNiTiAnvE 

The coverage area of the plan should be ejqfanded to include all of 
the Appalachian counties of New York State. 

Tier Information and Enterprise Resources^ Incorporated (TIER, 
Inc.) can serve as a coordinating mechanism for the regional 
planning boards and also for Identifying and helping to secure 
funding sources. 

An STI project coordinator should be assigned responsibility for 
coordinating initial and ongoing local and regional effort, in 
consonance with the overall plan. 

The non-profit Schoharie County Public, Educational, and 
Governmental Access Corporation (SCHOPEG Access, Inc.) could 
be expanded to serve as an implementation committee for a 
community network in Schoharie County. 

Funding is necessary for overall coordination, education, 
awareness, network engineering, and the Implementation of a 
community' network. The plan must receive appropriate 
endorsements from the Telecom Exchange, the Public Services 
Commission, cable TV companies, telephone companies, 
government agencies, elected public officials, as well as large and 
small businesses, health-care providers, and educational 
institutions. 



Northeast Networking 



138 



New York State 

Telecommunication Exchange 

(Overview) 



139 



STATVO^ New YORK 
Marto M. Cuetno, Govwnor 

OWfc»l fcw H«»Piiiii| M il 'aXa. Oi ii i m ^woi^tneawvf 




T#lHeninufliCMtoiw CictanQt 

OiviMn of Peier and RaMwcfi 

OwCoi Mn wiWaa 

AfeOT|r.NMtY0k122a 



JaraVaMon 



WORKING DRAFT OF PROPOSALS UNDER CONSmERATTON BY 
Tmr TFT Frn\fMTJNTCATTONS EXCHANGE, 

FOR DISCUSSION AT TTffi GQVEBMQRa 
TFT.FirOMMTffffCATIOlSS COISFERETfCE 

prcpuvo by 

THg wt'*"'"V*'*ow > Excfaton Stiff 

JuiM 1. 1993 



This woridnf dnft piper wu pitpuvd by the staff of tb» Tdeoommunicitioru Exciuafc in 
consulahoo wit^ die Exdange membenhip. It is intended xUy to provide background 
information for putidpants at the Governor's Telecooununicuions Confetawe as diey 
examine leiecommunications policy options, and to provide a point of depuQue for firuicAii 
discussion. Staff assunes Atll responsibility for any enon or inaccunciea. 

DRAFT FOR T.OVflWOR'S 

TFT FTOMMf mrrr AT^ONS rONFEREWCE USE ONLY 



140 
QyfTRVIEW 

nfff to<;e qf rms papct 

The purpose of diis dxaft saff working piper U to: 

• highlight key priority issues and areas of discussion on which the various 
Telecommuaications Exchange task fortes have focused thdr efforts to date. 

• provide a *"«f for discussion at the Governor's Telecommuniaiions Conference. 

This paper being distributed to all Governor's Confoence paniciptms prior to the 
conference, to enhance input and discussion at the conference. Additional materials will be 
made available at the conference. 

OUTLINE OF TBIS PAPER 

The present section of this paper provides an introduction to the Teleootnmunica&ons 
Exchange and the critical policy conoenis which led the GovenOT to the formation of the 
Exchange, and outlines the purposes and objectives of the June 16>17 Governor's Conference 
on Telecommunications. 

The following sactioo sunmajizes highlights and key issues emerging from the ask force 
work to H |tin lo particular, since each ask fbioe has ia fatx given highest prioiiiy to and 
made the mo« progres to dais oo a key subat of theae issues, this section attempts to 
outline and highlight imt key issues oo which the various task forces have focused most 
directly ia their preliminary delibeiaiiaDS through June, 1993. 

Finally, the conchidiag sectian outlines the various prerjects in progress and papen under 
development by the various task fofoaa. 

T ffE CQVERN QR'^ TW TrOMMIINTCATTONS EXCHANGE 

Advanced teleoooaunicaiioos tBchoology will have an impact on the next generation that 
will likely be as fiiadaiDeDal and proftxind as the impacts which ttan^ortaiion, telephones, 
computers, and deetrie powct have had on previous generations. Hie impactt of this 
emerging leehitology will touch viitually every aspect of how we live and work. 

To ensure that Kew York is in poddon to seize the economic and human opporrunities 
presented by this fundamentally transforming and empowering technology, Governor Mario 
M. Cuomo esublished the Telecommunications Exchange to bring policymakers together 
with industry, users, and other inieieatBd groups to develop and recommend a comprehensive 
state policy and stntegy for telecommunications. 



141 



<p^ mf^r*~» of tte Tdfloommuiucaaons Exchange is tp develop md (un accepcanoe of a 
Satewide. cot up w i< »aave tcleeommunicahocu policy to fully exploit ail opportunities that 

may be creaJul by aew tekeoaununicanons technologies while auunng the availability 

of high quality teleeommunicatioDS services to all of the State's citizau at affoidable phces. 

As put of this mixsioQ, tbe Exchange is ezploiing ways in which advanced 
telecommunicatians can be employed so strengthen New York's competitive position in che 
global economy and foster eoooomic development, and to enhance the quality of life and 
expand opportunity for all New Yoricen. The Exchange will praeot its flDdinp and 
ncoouDeadackiai to tb* Govesvor in a wrijan report, by the end of 1993. 

To faciljtas development of its work (ffoduct, the Exchange has been established wich five 
task forces working in (he following areas: 

Telecommunicaiions-Based and Related Industry 

Technology Di^sioo 

Infrastrucnire, Technology and Investment 

Regulatory Opdoos 

I^lbIjc Sector Applicaiioiu 

The Exchange is exploring how New York can udlizs telecommimirarioni as an instrumeat 
to help addieu some of the today's raott fundamental public policy issues, such as: 

Building aad «»fi»»»<«im « lodiof poiitioo In the global flcooooy by identifying key 
buxiiiesaes sad industriee in New York that lely upon commnnifationi to oocqtete and 
ensuring diat ds capability Id meet dieir evolving needs is ia place. 



Sciengihening tl» competitive poaitioo of brfe and snaD manufactnriiig aad 
servke fbaa, by proridinf a tekoommunicatioo infnstrucaite with the mos 
advanced '^t^muh^m p«— .ku ^g^ ^y auijitiflf diese firms in the applicaiioo and use 
of this infrastructm^ 

o Enhandng the capability of New York's en u ep i e n eun and academic insatutions for 
leading-edfB i— ai cfc aad devdopoieat by ensuring acceu to and compatibility with 
evolving a et wm k a aad aodards such u die National Reseuch and Educaiioe 
Network (NSEN). 

o Fosaing tDcxe aad >*>««^t Jofaa by identifying likely impacts of telecommunicanoos on 
the workforce aad pinpointing new opportunities for trrhnical workers in technology 
deploymcaL 

o Helping people aoquiie the educatioo and skills to work productively in the 

informaiion economy and become bener citizens by encouraging disance leaming and 
other forms of insizuction that can teach wider a u die nc es. 



142 



o Expaodinf oppoctontty by providing better access to emtrging informaiian 

cechxtolo{ics~which tilow partidpacion in the economic and social mainsocani. 

Pravidixi{ better health oure at lower cost by encouraging such approaches as temote 

(jiagnofdea aod enhanced home health care delivery. 

o Alleviating trassportatioo congestion and enviionmental impact by encouraging 

substitutioa of the movement of images and iofbrmaticm for the movement of people, 
and 'smart* traasportadoa systems. 

o Reducing the cotf of g OTeruDent while simultaneously providing better services to 

taxpayen, by encoura^g new ways of using telecommunications and information 
and possibly consolidating the delivery of multi-agency services to the consumen of 

these seivices. 

o Extending individual participation in the marketplaci of Ideu and contributing to the 
enlightened functioning of the democrstic proccsi by fostering new ways for people 
to commuaicate and exchange infonnatioiv. 

Issues which the Exchange is addressing to help achieve these goals include: 

• How to make optimal uw of New York's vast amy of infonnatioa and 
coaunankstlooi imurtas, such as telephone companies, cable television companies, 
wireless service providen, altenuuive network providets, iofbnnatioa providers 
including publistkcrs, aad othen, to ensure that New York retains a premier role in 
the emerging infonoadoa marke^lace. 

• How to define or redefine bask / unifvnal stfriee in light of changing technologia 
and changinf i^TffTffJCTit of the level of access to infortnaiian that is necsssaiy for 
mainstreaa ptitic^adoa in the society and economy. 

• Appropriate rolci for h i t kat -drifen and InfkiAnetim-driTeB approacbes to the 
developnKoi and de^oymeot of advanced teleoommunieadoDS. 

• The role of the itfofatory proeea in promoting economic devek^pment, educational, 
health care and ocber public policy goals, and in navigating through the transition to a 
moi« competitive teleoommunicaiions environment. 

• Whether and how the public sector should and can tererace its huge purchasing 
power and investments in telecommunications and information technology and service 
to achieve various policy objectives, including appropriate enhancements to public 
networks. 



143 

STATEMENT 

PRESENTED TO 



SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 
COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION 



FOR THE APPALACfflAN REGIONAL COMMISSION 



TUESDAY, JUNE 22, 1993 



ROOM 2167 RAYBURN HOUSE OFHCE BUILDING 
WASHINGTON, D. C. 



BY 

LINDA G. GAYHEART 
EXECUTIVE DIRECTOR 



KENTUCKY RIVER AREA DEVELOPMENT DISTRICT 

381 PERRY COUNTY PARK ROAD 

HAZARD, KENTUCKY 41701 

PHONE: 606/436-3158 

FAX: 606/436-2144 



144 



GOOD MORNING 

MY NAME IS LINDA GAYHEART AND I AM EXECUTIVE DIRECTOR OF THE 
KENTUCKY RIVER AREA DEVELOPMENT DISTRICT. OUR DISTRICT IS 
LOCATED IN SOUTHEASTERN KENTUCKY, WHICH. IS THE HEART OP THE 
APPALACHIAN REGIONAL COMMISSION AREA. 

I AM HERE TODAY REPRESENTING ONE OF THE MOST DEPRESSED AREAS 
OF OUR NATION. AS YOU WILL SEE FROM WHAT I HAVE TO SAY 

TODAY, WE HAVE MADE GREAT STRIDES, BUT WE HAVE FAR TO GO. 

OUR AREA CONSISTS 2566 SQUARE MILES IN AN EIGHT COUNTIES, AND 
123,495 INDIVIDUALS RESIDE IN OUR AREA. EVEN THOUGH OUR 
AREA HAS IMPROVED GREATLY IN THE PAST TWENTY YEARS, WE 
CONTINUE TO BE PLAGUED WITH MANY PROBLEMS. WE ARE AN AREA 
THAT IS LOSING ITS' PEOPLE. ACCORDING TO THE 1990 CENSUS, WE 
LOST 8% OF OUR POPULATION PRIMARILY DUE TO OUTMIGRATION. THE 
OFFICIAL POVERTY RATE FOR OUR AREA RANGES FROM 25 TO 48%, 
WITH AN AVERAGE PER CAPITA INCOME OF $9,269, COMPARED TO 
THE KY RATE OF $13,823 AND U.S. RATE OF $17,591. ALL OF OUR 
COUNTIES ARE CLASSIFIED BY THE APPALACHIAN REGIONAL 
COMMISSION AS DISTRESSED. 

BEING REALISTIC, I THINK IT IS FAIR TO SAY THAT OUR AREA MUST 
BE CONSIDERED HARD CORE APPALACHIA, LAGGING BEHIND THE REST 
OF THE NATION IN ALMOST ALL MEASURES OF QUALITY OF LIFE. 

AS I STATED ABOVE, WE HAVE MADE GREAT STRIDES IN OUR AREA 
OVER THE LAST 20 YEARS. AND ARC HAS BEEN THE KEY FACTOR IN 



145 



THIS GROWTH. IT HAS BEEN THE GLUE THAT HAS HELD PROJECTS 

TOGETHER AND MADE THEM WORK. IT HAS GIVEN US THAT EDGE THAT 
WE HAD TO HAVE TO MAKE A PROJECT WORK. IT HAS ENABLED US TO 
LEVERAGE OTHER FUNDS NECESSARY TO PUT A PROJECT TOGETHER. 
IT HAS ENABLED US TO BUILD A FOUNDATION IN THE AREA OF BASIC 
COMMUNITY SERVICES ON WHICH WE NOW MUST FURTHER BUILD. 

SSMi INDUSTRY 

HISTORICALLY, WE ARE A ONE INDUSTRY ECONOMY. COAL MINING HAS 
BEEN AND CONTINUES TO BE THE DOMINANT INDUSTRY IN THE AREA. 
THEREFORE, THE ECONOMY OF THE AREA HAS BEEN DIRECTLY RELATED 
TO THE BOOM AND BUST CYCLE OF THE COAL INDUSTRY. BtJT, 
ACCORDING TO THE KY GEOLOGICAL SURVEY, WE HAVE ONLY ENOUGH 
COAL TO MINE FOR THE NEXT 20 YEARS. IN ADDITION, MAINLY DUE 
TO MECHANIZATION, EMPLOYMENT IN THE COAL INDUSTRY CONTINUES 
TO DECREASE. IN 1978, IT TOOK 18,670 MINERS TO PRODUCE 30 
MILLION TONS OF COAL. IN 1990, IT TOOK 14,351 MINERS TO 
PRODUCE 45 MILLION TONS OF COAL. 
WE HAVE FEWER THAN 800 MANUFACTURING JOBS IN THE AREA. 

umrMPI^VMENT 

WITHIN THE EIGHT COUNTY AREA AT PRESENT, THE OFFICIAL 

UNEMPLOYMENT RATE IS 15 %. BUT, WE HAVE MANY 

INDIVIDUALS WHO ARE UNEMPLOYED, BUT ARE NOT LISTED IN THE 

OFFICIAL RATES BECAUSE THEY ARE WHAT WE CALL DISCOURAGED 
WORKERS, 

ARE NOT ACTIVELY SEEKING EMPLOYMENT. SO, WE FEEL THAT WE 
HAVE A TRUE UNEMPLOYMENT PATE OP 30% , AND IN SOME COUNTIES , 



146 



UP TO 50%. 

PQPPTATION IQSS. 

WITH OUR POPULATION LOSS, WE FEEL THAT WE ARE LOSING OUR 
BRIGHTEST AND BEST. WE ARE LOSING OUR YOUNG PEOPLE. APTER 
THEY COMPLETE HIGH SCHOOL, THEY MOVE AWAY TO ATTEND COLLEGE 
OR TRAINING OR GET A JOB ELSEWHERE AND DO NOT RETURN. 

n-rvwRSTFYING ZSS ECPMOlff 

SO, AS YOU CAN SEE, IT IS IMPERATIVE THAT WE DO SOMETHING 

ABOUT OUR JOB SITUATION IN THIS AREA WE MUST FOCUS ON 

DIVERSIFYING THE ECONOMY AND CREATING JOBS FOR OUR PRESENT 

POPULATION AS WELL AS OUR FUTURE GENERATIONS. 

BUT, THIS IS EXTREMELY DIFFICULT. IT IS DIFFICULT TO RECRUIT 

INDUSTRY IN THERE IS NO ADVANTAGE FOR AN INDUSTRY TO COME 

TO HAZARD, KENTUCKY WHEN THEY CAN LOCATE IN AREAS CLOSER TO 
INTERSTATES AND AREAS WITH BETTER INFRASTRUCTURE. 
EFFORTS ARE UNDERWAY IN THE AREA TO DO THIS, TARGETING ON 
TELECOMMUNICATIONS, THE WOOD INDUSTRY, DEVELOPMENT OF SMALL 
BUSINESSES, TOURISM AND RECRUITMENT OP INDUSTRY PROM OUTSIDE. 
PROGRAMS SUCH AS THE REVOLVING LOAN FUND THROUGH ARC ARE 
CRITICAL IN OUR AREA. WE MUST HAVE THIS EXTRA HELP AS WE TRY 
TO DEVELOP JOBS IN ORDER TO COMPETE WITH OTHER MORE DEVELOPED 
PARTS OF THE COUNTRY. 

VQCATTQNAL EDUCATION 

TRAINING AND RETRAINING OF OUR WORK FORCE IS CRITICAL. ARC 

HAS PLAYED A SIGNIFICANT ROLE IN THE DEVELOPMENT OF 



147 



VOCATIONAL EDUCATION IN OUR AREA. BECAUSE OF ARC, WE NOW 
HAVE A VOCATIONAL TRAINING CENTER WITHIN A HALF HOUR'S DRIVE 
OF ALL OF THE RESIDENTS OF THE DISTRICT. ARC FUNDED 72% OF 
THE BUILDINGS AND EQUIPMENT FOR THESE FACILITIES. NOW, WITH 
THE HELP AND SUPPORT OF ARC, WE MUST DEAL WITH OUR 
"DISLOCATED WORKER", THE MEN AND WOMEN LAID OFF FROM THE COAL 
INDUSTRY . 

AS WE TRY TO DIVERSIFY THE ECONOMY, WE MUST PREPARE OUR 
WORKFORCE FOR THESE JOBS. 

ARC HAS ASSISTED OUR MUNICIPALITIES IN CONSTRUCTING WATER 
PLANTS AND RUNNING WATER LINES. EACH OF OUR 12 MUNICIPALITIES 
NOW HAS A WATER TREATMENT PLANT AND PROVIDE WATER TO 
RESIDENTS WHO RESIDE IN AND NEAR THESE TOWNS. BUT, IN A 
RECENT STUDY IN KY, IT WAS POINTED OUT THAT 25 % OF THE 
POPUIATION IN KENTUCKY WITHOUT TREATED WATER RESIDE IN OUR 
DISTRICT. THIS IS OVERWHELMING WHEN COMPARED TO THE FACT 
THAT LESS THAN 1% OF KY.'S POPULATION RESIDES HERE. 
OVER 65% OF THE RESIDENTS IN OUR AREA ARE NOT SERVED BY 
PUBLIC WATER AND SEWER SYSTEMS. 

ROADS 

ARC HAS BEEN RESPONSIBLE FOR GREAT STRIDES IN THE ROAD SYSTEM 
IN THE AREA. A LARGE PERCENTAGE OF THE ARC CORRIDORS HAVE 
BEEN COMPLETED, BUT SOME CRITICAL PIECES REMAIN. 

SOLID WASTE 



148 



A MAJOR PROBLEM IN OUR AREA IS PROPER DISPOSAL OF SOLID 
WASTE. IT HAS ONLY BEEN IN THE PAST 5 OR 6 YEARS THAT WE 

HAVE BEEN ABLE TO EFFECTIVELY DEAL WITH THIS PROBLEM AND WE 

ARE BY NO MEANS FINISHED. 

ONE or OUR COUNTIES HAS TAKEN THE LEAD STATEWIDE BY 
IMPLEMENTING A DOOR TO DOOR COUNTY WIDE COLLECTION SYSTEM. 
IT WAS ONLY WITH THE HELP OF ARC THAT THIS WAS POSSIBLE. ARC 
PROVIDED GRANT FUNDS FOR KNOTT COUNTY TO PURCHASE GARBAGE 
TRUCKS, SOME THAT HAD TO BE SPECIALLY EQUIPPED FOR FOUR WHEEL 
DRIVE TO SERVE THIS RUGGED TERRAIN. IN THE AREA OF SOLID 
WASTE, LIKE SO MANY OTHERS, THE BURDEN OF THE SERVICE IS 
FALLING MORE AND MORE ON LOCAL GOVERNMENTS— WITHOUT FUNDS TO 
PROVIDE THE SERVICES. THIS BECOMES AN EVEN GREATER PROBLEM 
IN AREAS SUCH AS OURS, WITH LESS LOCAL REVENUE THAN IN 
PERHAPS OTHER AREAS. 

RTiGTONALISM 

I WOULD BE AMISS IF I DID NOT ADDRESS THE AREA MOST DEAR TO 
MY HEART AND THAT IS REGIONALISM. THROUGHOUT THE ARC AREA, 
THE LOCAL DEVELOPMENT DISTRICTS, WITH THE SUPPORT OF ARC AND 
EDA, ARE ACTIVELY WORKING WITH LOCAL COMMUNITIES TO SOLVE THE 
MANY PROBLEMS OF THE AREA. WE BRING LOCAL OFFICIALS AND 
CITIZENS TOGETHER MONTHLY TO SIT DOWN TOGETHER AND SHARE 
COMMON CONCERNS. MORE IMPORTANTLY, WE GIVE THEM AN 
OPPORTUNITY TO SOLVE PROBLEMS TOGETHER. ALTHOUGH THERE 
REMAINS SOME PAROCHIALISM, WE ARE BREAKING DOWN COUNTY LINES. 
THEY ARE BECOMING LESS AND LESS A BARRIER TO COOPERATION. WE 



149 



ARE IMPLEMENTING A JOINT PURCHASING PROGRAM WHICH ENABLES 
LOCAL UNITS OF GOVERNMENT TO BUY MATERIALS AND SUPPLIES 

TOGETHER AND THUS CUT COSTS. 

WE ARE WORKING WITH THE COUNTIES TO DEVELOP A REGIONAL 
APPROACH TO THE OVERALL PROBLEM OF THE DISPOSAL OF SOLID 
WASTE. WE HAVE A NEW REGIONAL MEDICAL CENTER IN OUR AREA AS 
A RESULT OF COMMUNITY LEADERS WORKING TOGETHER. MANY OF OUR 
HEALTH AND HUMAN SERVICES ARE DELIVERED ON A REGIONAL BASIS, 
INCLUDING MENTAL HEALTH SERVICES AND PUBLIC HEALTH SERVICES. 
WE HAVE A REGIONAL SPOUSE ABUSE CENTER AND MANY OP THE 
PROGRAMS FOR THE ELDERLY ARE PROVIDED FROM A REGIONAL BASE. 
THROUGHOUT APPALACHIA, THERE ARE MANY EXAMPLES OF 
REGIONAL APPROACHES TO PROBLEM SOLVING. 

BESIDES PROVIDING THE OPPORTUNITIES FOR REGIONAL PROGRAMS, WE 
PROVIDE THE PROFESSIONAL STAFFING TO OUR COMMUNITIES THAT 
THEY COULD NOT OTHERWISE AFFORD. WE ASSIST WITH A WIDE RANGE 
OF SERVICES TO HELP THE LOCAL GOVERNMENTS AND OTHER 
ORGANIZATIONS. THIS RANGES FROM ASSISTANCE WITH THE 
BUDGETING PROCESS TO HELP WITH DEVELOPING PROJECT 
APPLICATIONS. WE ASSIST SMALL BUSINESSES WITH FINANCING 
OTHERWISE NOT AVAILABLE THROUGH OUR REVOLVING LOAN PROGRAM. 
IN OUR AREA, WE ARE IN A PROCESS OF STRATEGIC PLANNING 
TO INSURE THAT WE UTILIZE WHAT WE HAVE TO THE MAXIMUM AND 
MOVE IN THE RIGHT DIRECTION. AND ON AND ON. IN A SENSE, I 
SEE US AS THE LOCAL ARM OF ENTITIES SUCH AS ARC AND EDA. WE 
ARE OUT THERE ON THE FRONT LINES— WHERE THE RUBBER MEETS THE 



150 



ROAD WE ARE A WAY TO MESH THE NEEDS OF LOCAL COMMUNITIES 

WITH THE INTENT OF PROGRAMS OUT OF THE STATE AND FEDERAL 
GOVERNMENTS AND TO BUILD THE CAPACITY OF LOCAL GOVERNMENTS. 

I FEEL THAT THE LOCAL DEVELOPMENT DISTRICT PROGRAM IS, 
OVERALL, PERHAPS ONE OF THE MOST CRITICAL PROGRAMS THAT ARC 
IS FUNDING. WE MAKE THE ARC PROGRAMS WORK. WITHOUT ARC AND 
THE LOCAL DEVELOPMENT DISTRICTS, WE TAKE AWAY THE ONLY 
OPPORTUNITY FOR LOCAL COMMUNITIES TO WORK TOGETHER AND TAKE 
AWAY THEIR PROFESSIONAL STAFF, THAT ARE SO CRITICAL IN ALL 
AREAS, RANGING FROM HUMAN SERVICES TO SOLID WASTE TO WATER 
AND SEWER TO ECONOMIC DEVELOPMENT. 

WITHOUT THE LDD'S, I BELIEVE THAT OUR AREA AND COMMUNITIES 
WOULD BE SET BACK AT LEAST 20 YEARS. 

I TALKED EARLIER ABOUT ECONOMIC DEVELOPMENT. THIS HAS TO BE 
APPROACHED ON A REGIONAL BASIS, WHICH IS WHAT WE ARE DOING, 
WITH THE HELP OF ARC IN OUR AREA. EVEN WITH AN ACTIVE 
ECONOMIC DEVELOPMENT OFFICE IN OUR STATE CAPITOL, DEPRESSED 
AREAS SUCH AS OURS MUST HAVE GREATER SUPPORT IF WE ARE TO 
CREATE JOBS. ARC RECENTLY PROVIDED FUNDS TO ENABLE US TO 
EXPLORE THE POTENTIAL OF A WOOD INDUSTRY IN EASTERN KENTUCKY. 
APPROXIMATELY 80% OF THE AREA IS FOREST, AND THIS POTENTIAL 
NEEDS TO BE EXPLORED AND DEVELOPED TO THE FULLEST. 

LEADERSHIP 

EVERYTHING THAT ARC HAS DONE IN THE AREA WILL CERTAINLY HAVE 

LASTING RESULTS. BUT, PERHAPS THE ONE THAT IS SIGNIFICANTLY 



151 



DIFFERENT IS HELP THAT ARC HAS PROVIDED US IN LEADERSHIP 
DEVELOPMENT. OUR CITIZENS HAVE LITTLE, IF ANY, 
OPPORTUNITY FOR LEADERSHIP TRAINING. LEADERSHIP IN THE AREA 
HAS IMPROVED, BOTH WITH THE ELECTED LEADERSHIP AS WELL AS 
CITIZEN LEADERSHIP. 

OUR DISTRICT HAS BENEFITED FROM THE ROLE THAT ARC HAS PLAYED 
IN LEADERSHIP IN TWO WAYS. LAST YEAR, 

ARC FUNDED A YOUTH LEADERSHIP PROJECT IN OUR AREA THAT 
ENABLED US TO WORK WITH YOUNG PEOPLE FROM THROUGHOUT OUR 
REGION. THEY WERE EXPOSED TO LOTS OF DIFFERENT THINGS 
THROUGH THIS PROJECT, GAINING A KNOWLEDGE AND APPRECIATION 
FOR THE ROLE OF ELECTED AND NON ELECTED LEADERS IN OUR 
COMMUNITIES, UNDERSTANDING THE IMPORTANCE OF EVERYONE WORKING 
TOGETHER ON A REGIONAL BASIS. THEY WERE ALSO RESPONSIBLE 
FOR DEVELOPING A PROJECT, TAKING IT FROM JUST AN IDEA TO 
ACTUAL IMPLEMENTATION. THEY WERE ABLE TO USE THE ARC FUNDS 
TO LEVERAGE LOCAL GOVERNMENT AND PRIVATE DOLLARS AND LEARNED 
HOW TO COMPLETE AN APPLICATION FOR A PROJECT AND HOW TO 
OVERSEE IMPLEMENTATION. PERHAPS THE MOST IMPORTANT BENEFIT 
OF THIS PROGRAM IS THAT OUR KIDS LEARNED THAT THEY CAN MAKE A 
DIFFERENCE IN THEIR COMMUNITIES. WE HOPE THAT SOME OF THEM 
WILL DECIDE TO MAKE THAT DIFFERENCE BY REMAINING IN THE 
REGION AS ADULTS. THERE IS NO WAY THAT WE COULD HAVE GIVEN 
THESE YOUNG PEOPLE THIS EXPERIENCE WITHOUT THE HELP OF ARC. 

THE SECOND WAY THAT WE HAVE BEEN INVOLVED IN LEADERSHIP 
DEVELOPMENT WITH ARC HAS BEEN IN WORKING WITH THE BRUSHY FORK 



152 



INSTITUTE, WHICH IS AFFILIATED WITH BEREA COLLEGE IN 
KENTUCKY. THROUGH THE HELP OF ARC, BRUSHY FORK HAS BEEN ABLE 
TO TRAIN TEAMS OF LEADERS FROM VARIOUS COMMUNITIES, WHO THEN 
HAVE BEEN ABLE TO BECOME CHANGE AGENTS IN THEIR COMMUNITIES. 
ALL KINDS OF INTERESTING PROJECTS HAVE RESULTED OUT OF THE 
BRUSHY FORK TRAINING. ONE IN OUR DISTRICT WAS THE 
ESTABLISHMENT OF A SELF-HELP PROGRAM CALLED WORKERS OF RURAL 
KENTUCKY IN OWSLEY COUNTY, ONE OF THE POOREST COUNTIES IN OUR 
NATION. A COOPERATIVE WAS FORMED, PRIVATE FOUNDATION MONEY 
WAS OBTAINED AND A BUILDING PURCHASED. THIS BUILDING BECAME 
SORT OF A SMALL INCUBATOR, SERVING AS SPACE FOR A TEE SHIRT 
SHOP THAT WAS OPENED BY ONE OF THE MEMBERS, A CARPET CLEANING 
BUSINESS, AND A USED CLOTHING STORE- THE COOPERATIVE 
PROVIDES A COMPUTER AVAILABLE FOR THE BUSINESSES AND A 
COMMON RECEPTION AND PHONE AREA. IT ALSO SERVES AS A MEETING 
PLACE FOR MEMBERS OF THE COOPERATIVE AND OTHERS FOR WORKSHOPS 
AND TRAINING SESSIONS. 

CLOSING 

WE RECENTLY COMPLETED A CITIZENS SURVEY AND COMMUNITY 

MEETINGS THROUGHOUT OUR AREA AS A PART 

OF OUR STRATEGIC PLANNING EFFORT. OF THE 1500 CITIZENS THAT 

WE SURVEYED, THE TOP NEEDS IDENTIFIED WERE: JOB CREATION, 

CLEANING UP THE ENVIRONMENT, BETTER ROADS, WATER AND SEWER 

SERVICES, BETTER AND MORE AFFORDABLE HEALTH CARE, BETTER 

SCHOOLS AND BETTER HOUSING AND IMPROVED LEADERSHIP. . THESE 

RESULTS REFLECT THE AREAS IN WHICH COMMUNITY LEADERS NEED TO 

FOCUS THEIR ENERGIES. 



153 



SOME VERY IMPORTANT THINGS ARE HAPPENING IN KENTUCKY — 
EDUCATION REFORM, AND MORE RECENTLY HEALTH CARE REFORM. 
THESE ARE IMPORTANT FOR ALL OF KY, BUT ESPECIALLY EAST KY. 
AS I HAVE SAID PREVIOUSLY, ME HAVE BUILT A FOUNDATION 
WITH A NETWORK OF BASIC INFRASTRUCTURE AND BASIC SERVICES. 
WE NOW CAN FOCUS ON EXPANSION OF THESE SERVICES AND TARGET IN 
ON ECONOMIC DEVELOPMENT AND HUMAN SERVICES. ALTHOUGH IT IS 
GOING TO BE DIFFICULT TO CREATE JOBS IN OUR AREA AND TO 
CONTINUE TO EXPAND ON THE SERVICES WE NOW HAVE IN PLACE, 
THESE ARE NOT INSURMOUNTABLE PROBLEMS. WITH ADEQUATE 
HIGHWAY ACCESS, BETTER FLOOD CONTROL, BETTER EDUCATION AND 
BETTER HEALTH CARE, WE CAN CONTINUE TO CONSTRUCT OUR 
BASIC FOUNDATION AND MAKE IT PAY OFF. 

I URGE YOUR SUPPORT FOR THE APPALACHIAN PROGRAM TO ENABLE US 
TO CONTINUE TO IMPROVE THE QUALITY OF LIFE FOR OUR PEOPLE. 
IT IS NOT AN EASY TASK, BUT WE MUST NOT GIVE UP. 



154 



STATEMENT OF CONGRESSMAN BOB GOODLATTE 

BEFORE THE 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 

June 22, 1993 



Mr. Chainnan, 

I join my fellow Virginian, Congressman Boucher, to request additions to the Appalachian 
Regional Commission. Congressman Boucher and I have introduced legislation that would 
include the counties of Roanoke, Rockbridge, Montgomery, and the contiguous, independent 
cities of Roanoke, Salem, Radford, Lexington and Buena Vista as part of the Appalachian 
Regional Commission. Roanoke and Rockbridge Counties are in my congressional district. 
Roanoke County is contiguous to Montgomery County in Congressman Boucher's district. 
Rockbridge County is contiguous to three counties ah-eady in the ARC. 

When the ARC was created over twenty-five years ago, Roanoke, Rockbridge and 
Montgomery Counties were asked to joiiL At that time the local officials decided not to 
become members. 

In hindsight, tiiis decision was a mistake, not only for the three counties, but also for the area 
counties w*ich are members. Many economic development projects require the participation 
of adjoining counties. Yet, Roanoke, Rockbridge and Montgomery Counties are excluded 
from any project funded by the ARC. 

Already a part of the Appalachian region both geogrs^hically and culturally, these three 
counties have demonstrated a clear need for the development opportunities available through 
the ARC. If these counties and the contiguous independent cities are designated as part of the 
ARC region there will be an enhanced opportunity to pursue joint programs. The potential 
for combined efforts in tourism, infrastructure projects and strengthening competitiveness in 



155 

attracting new businesses would be tremendous. 

In addition, for the ARC to ultimately succeed in its mission to provide Appalachia with the 
infrastructure it needs to develop into an economically viable region, it only makes sense that 
these three important counties be added to its membership. 

Their addition will provide an essential sense of regionalism with the coimties already within 
ARC, allowing them to work together to solve the many problems of the area. It's time to 
realize that city, county and even state lines are becoming less and less a barrier to 
cooperation. 

Finally, by designating the Roanoke Valley, Rockbridge County and Montgomery County as a 
part of ARC, Congress will be strengthening the partnership between western and 
southwestern Virginia. 

Mr. Timothy Gubala, the Director of Economic Development for Roanoke County, and Mr. 
Stewart Litvin, Executive Director for Economic Development for Rockbridge County, are 
accompanying me today. I am sure they will explain in more detail the types of cooperative 
efforts that will be possible if these counties are included in the ARC. 

In closing, I want to thank the subcommittee for its consideration, and urge the members to 
favorably support this important piece of legislation. 



156 



A stateneot to tbe Public works subconunittae 

In support of designating Roanoka County and tba 

Roanoke Valley within the boundaries of the 

Appalachian Regional Gomnisslon 

Submitted by Tiaothy eubaia. Director of Economlo Oevelopaent/ 
Roanoke County 



Roanoke County is seeking to join the Appalachian Regional 
Comnission with other Roanoke Valley and western Virginia 
comnunities. The regional relationship of Roanoke County with the 
western Virginia area is well established with the inflow of people 
into the County for shopping, employment opportunities, and medical 
services. The Roanoke Valley communities together comprise a 
regional center offering air transportation, financial services, 
and cultural/arts experiences to over 650,000 people in the western 
Virginia area. 

The Appalachian Regional Commission's (ARC) current boundaries 
do not encompass Roanoke County, the cities of Roanoke and Salem, 
nor neighboring Montgomery County. Two other neighboring counties 
(Craig and Botetourt) both of which are members of the Roanoke 
Metropolitan Statistical Area, are currently included within the 
ARC area. 

Roanoke County desires the Appalachian Regional Commission 
destination in order to have access to programs and funding 
opportunities that will address prograac and funding opportunities 
that will address currant challenges of under-omployment, 
infrastructure, and educational disparities. 



157 



The recent recession and econonic downturn had its impacts in 
the Roanoke valley. Various companies announced job losses of 
3,600 people in the Roanoke Valley since June 1992. 

The job losses and recession hit hard at two local companies. 

Roanoke County citizens comprised over one half of the 1,200 
jobs lost at Dominion Bankshares and cooper industries. There was 
a "ripple effect" through the Valley area as the layoffs affected 
supporting business and services and the earning power of many 
families. " 

The Appalachian Regional comnission's economic development 
programs offer Roanoke County the ability to expand and diversify 
the employment base. The industrial site program could assist 
Roanoke County's efforts do develop its 177 acre Valley TechPark 
industrial park, county and state of Virginia funds are currently 
being used to develop an access road and to extend public water and 
sewer for Phase I of the development plan for the property. 
Matching federal funds through ARC could be a factor in completing 
the other two phases of the industrial park development. 

Seventeen miles of Interstate 1-81, the "main thoroughfare" 
through western Virginia, has six interchanges in Roanoke County, 
over 27,200 vehicles a day travel through Roanoke County. The 
Roanoke Valley Convention and visitors Bureau indicates that there 
are 16 million potential visitors traveling 1-81 annually. The 
County wants to attract these travelers into the Roanoke Valley for 
shopping, travel services, and cultural events/ fcctivale. 



158 



ARC'S tourism emphasis could provide matching progxraa funds 
for the development of projects aimed at bringing tourists into 
Roanoke County such as the innovative visitors information radio 
project proposed by the Convention and Visitors Bureau. 

Roanoke County is also fortunate to have 27 miles of the Blue 
Ridge Parkway and four access/exit ramps in the County. Over 8 
millon visitors enjoyed the scenic Appalachian beauty and mountain 
heritage along the Blue Ridge Parkway in Virginia in 1991. 

Roanoke County is involved in a public private partnership to 
develop the Explore project, Virginia's environmental Education 
Center, with the state of Virginia and private sector foundation. 
Twelve million dollars from the Federal Highway Administration is 
being used to develop a 1.8 mile access road extension from the 
Blue Ridge Parkway into Explore. 

Part of this Explore project envisions the location of a Blue 
Ridge Region Visitors Center on the Blue Ridge Parkway in Roanoke 
County. This facility would provide general information on the 
communities and attractions of the Blue Ridge Region and interpret 
the Appalachian cultural heritage of western Virginia to the 
visitors who use the Blue Ridge Parkway. The Appalachian Regional 
commission could he a potential partner in developing the Visitors 
Center. 

Roanoke County is an urbanizing covinty with a history of 
cooperative agreements and joint ventures with neighboring 
Botetourt County (in ARC) . Three projects completed with joint 
funding include the Hoi 1 ins Community Development project (housing 



159 



and rehabilitation for 28 units, water and eew«r service, and road 
inprovements) ; the development of the 65 acre Jack Smith industrial 
Park, the construction and operation of the joint county Blue Ridge 
Library and a joint county Read Mountain fire station. Further 
joint projects sure envisioned for an industrial park in the 1-81 
corridor with Botetourt County. 

Roanoke county has the perspective that during the 1990 's 
local governments should pursue regional solutions to address 
common problems. Inclusion of Roanoke County within the boundaries 
of the Appalachian Regional Commission is another resource for 
Roanoke County to use in addressing challenges and opportunities 
within the Roanoke Valley. 

Between October 24-28, 1993, the Appalachian Regional 
Comnission will hold its full conference in Roanoke, Virginia. It 
would be a fitting and proper location to announce the inclusion of 
Roanoke County and its neighboring communities and welcome them 
into the Appalachian Regional Commission. 



160 



Testimony Of Honorable Brereton C. Jones 

Governor Of Kentucky 

To 

House Economic Development Subcommittee 

Honorable Bob Wise (D-WV), Chairman 

Tuesday, June 22, 1993 



Chairman Wise, Ranking Minority Member Molinari, and other Members. 
It is a pleasure to appear today before you on behalf of the Governors of the thirteen 
Appalachian states and to speak in support of the Appalachian Regional Commission. 

As you may know, Governor Doug Wilder of Virginia is our States' Co- 
Chairman this year. He sends his apologies for not being able to be here today. 

This Subcommittee has been steadfast in its support of the Appalachian 
Regional Commission. As Governor of Kentucky, in the heart of Appalachia, I 
know first-hand what your support of this program has meant to our citizens - and 
I thank you. 

In fact, Mr. Chairman, as you well know, it is in our two states that the effort 
to change the face of Appalachia began. You and I have both seen the dramatic 
impact of ARC programs on the quality of life in much of the Region. 

I personally applaud your aggressive leadership in holding these hearings and 
in promoting multi-year re-authorization legislation. 

I also applaud President Clinton. For the first time in thirteen years we have 
a budget recommendation from the President which contains adequate fiinding for the 
Appalachian Regional Commission. Of course, we could effectively spend 
considerably more money to improve the quality of life and create jobs in 
Appalachia. But we recognize the fiscal realities, and we are grateful for the 
President's support of a ftinding level which is consistent with what the Congress, in 
its wisdom, has provided us for the past two years. 

Let me also say that we pride ourselves on the bi-partisan support we have 
had in Congress over the years, particularly on this Committee. For years Bill 
Clinger from Appalachian Pennsylvania was the Ranking Minority Member and a 
strong advocate for the Commission. Representative Molinari, you may not 
represent a district in Appalachia, but we do appreciate your sensitivity to the needs 
of the Region. 

There is strong bi-partisan support among the Governors, as well. 

In 1981 it was the bi-partisan leadership of Governors Lamar Alexander of 
Tennessee and Jay Rockefeller of West Virginia which resulted in all thirteen 



161 



Appalachian Governors, nine Democrats and four Republicans, at that time, standing 
strong and united against the Reagan Administration's effort to abolish the 
Appalachian Regional Commission, 

Earlier this year, Mr. Chairman, the thirteen Appalachian Governors, now ten 
Democrats and three Republicans, unanimously re-affirmed their strong support in 
a resolution recommending continuation of the Appalachian Regional Commission. 
With your permission I would like to enter this resolution as part of the record of this 
hearing. 

The resolution extols the work of the ARC in helping the thirteen Appalachian 
states to: 

1) overcome the isolation of the Region by completing more than 
2,200 miles of a planned highway network of 3,025 miles; 

2) enhance the quality of job training and readiness for 
employment; 

3) expand access to health care; 

4) create more than 2 million new private sector jobs in the 
Region through investments in physical infrastructure and 
human development; and 

5) put our states on the cutting edge of issues such as job skills 
and training, rural education reform, technology transfer, 
export promotion, telecommunications, and manufacturing 
competitiveness. 

Because of the ARC: 

1) more than 700 vocational and technical education facilities with 
the capacity to serve over 400,000 students per school year 
have been created. 

2) A network of health care facilities and personnel has brought 
primary care within 30 minutes of virtually every resident. 

3) 20,000 housing units have been rehabilitated. 

4) More than 2,000 water, sewer, waste disposal, and other 
community development projects to provide basic services, 
enhance the quality of life, and attract private sector jobs, have 



162 



been completed. 

5) We are involved in demonstration projects in manufacturing 
competitiveness, telecommunications, and workforce training. 

6) And our highway .system is more than two-thirds complete. 

The resolution also identifies the unique characteristics of the ARC which 
have enabled it to deliver on its promises. 

First, its Federal-state-local parmership substantially reduces bureaucratic red 
tape and insures more responsible and responsive decision-making. 

Second, the flexibility of its programs allows locally detennined needs to be 
addressed without federally-imposed artificial restrictions. 

Third, its regional approach produces significant economies of scale and helps 
to focus attention on economically distressed rural areas, which otherwise could be 
easily ignored. For such areas it supplements raUier than duplicates the work of 
other government agencies. 

Fourth, it requires cost sharing by state and local governments in both 
program and administrative expenditures. This magnifies the impact and insures that 
scarce Federal dollars are spent efficientiy. ARC's $2.2 billion in non-highway 
funding has attracted more than $5.5 billion in other government funds. By working 
in close partnership with the private sector, ARC has managed in some cases to 
leverage its spending at a ratio of better than 6 to I. 

But, Mr. Chairman, despite the significant progress we have made, much of 
Appalachia still lags behind the nation in key indicators such as per capita market 
income, rates of poverty and unemployment, condition of infrastructure and levels 
of literacy and access to health care. 

In 1990 Appalachia's per capita income was 80% of the US per capita 
income. 

In 1990 15.2% of our people lived in poverty, compared wiUi 13.1% in the 
United States. 

In December, 1992 one-fourth of Appalachia's 399 counties had 
unemployment rates of at least 150% of the national average. 

More than one-third of Appalachia's 300 non- metropolitan counties are 
considered economically distressed. 



163 



During the decade of the 1980s our population grew by approximately one- 
quarter of the rate that the US population grew. 

Our manufacturing employment has declined by a rate greater than the 
national average, our regional share of national coal output has fallen, and our 
regional mining employment has been cut almost in half. 

To compound the problem Appalachia receives approximately 15 % less than 
the per capita national average in Federal expenditures. 

We have seen the progress, Mr. Chairman, but we also know how much 
remains to be done. 

That is why the Governors unanimously and enthusiastically support multi- 
year authorizing legislation for the Appalachian Regional Commission. We believe 
that a bill of three to five years in duration at a funding level at least consistent with 
the current funding level would enable us to continue significant progress toward 
achieving parity of economic opportunity with the nation. 

At the same time we would welcome increased flexibility in the allocation of 
funds between highway and area development programs. This would enable us to 
insure that we get the maximum impact from our dollars. 

Of course, Mr. Chairman, we would be happy to discuss with you any other 
provisions which you may wish to consider. 

I want to make one other point. We believe that the flexibility, the 
responsiveness, the cost effectiveness, and the broad local, state, and national support 
for the ARC partnership make it a model for how to effectively address 
concentrations of rural economic distress wherever they may exist. As you can see 
on this map, the primary concentrations of severe rural economic distress, denoted 
by the solid red, are in central Appalachia, the Lower Mississippi Delta, and along 
our border with Mexico. 

We believe that a serious examination of ways in which the ARC programs 
can be strengthened and its lessons applied to other concentrations of rural economic 
distress is in order. We would welcome the opportunity to work with the Congress 
and the Administration to accomplish such an examination. 

Mr. Chairman, I appreciate the opportunity to appear before you this 
morning. I would welcome any questions you might have. 

Thank you very much. 



164 






Rockbridge Area Economic Development Commission 

6 South Randolph Street Lexington, Virginia 24450 (703)463-7346 FAX: (703) 463-7348 



STUART L. UTVIN, CED 
Executive Director 



PREPARED REMARKS 



STUART L. LITVIK, CED 



FOR 



COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION 



SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 



JUNE 22, 1993 



165 






Rockbridge Area Economic Development Commission 

6 Soutfi Randolph Street Lexington, Virginia 24450 (703)463-7346 FAX; (703) 463-7348 



June 22, 1993 



STUART L UTVIN, CED 
ExtaatM Unaor 



My name Is Stuart Lltvin and I am Executive Director of the 
Rockbridge Area Economic Development Commission representing the 
County of Rockbridge and the two independent Cities of Lexington 
and Buena Vista located in the central western portion of Virginia. 

In 1965, for whatever reasons, the jurisdictions of the 
Rockbridge Area chose not to apply for membership in the 
Appalachian Regional Commission. In 1977 the local jurisdictions 
and, again in 1988, the Commission, investigated the possibility 
of reversing that decision and becoming a member of ARC. I am here 
today to respectfully request the passage of the bill before you 
that would allow the Rockbridge Area that opportunity. 



We do not ask this lightly, but with full appreciation and 

respect for what the Appalachian Regional Commission was 

established for and the accomplishments it has helped communities 
achieve. 



166 



2 
In March of this year, our Area unemployment figure was 9.2%, 
well above the State and National levels of 5.2% and 7.3% 
respectively. Buena Vista alone had an 11.6% figure reflective 
of the impact of the recent recession, especially with the closing 
of the Blue Bird Bus Body facility and the additional impact of the 
1985 flood. 

The Rockbridge Area is bordered on its west by the counties 
of Alleghany, Bath and Highland, as well as the cities of Clifton 
Forge and Covington, all present members of the Appalachian 
Regional Commission. There exists among these five localities and 
the Rockbridge Area a great deal of commonality and cooperation. 
The community college, Dabney S. Lancaster, located in Clifton 
Forge serves these five communities as well as the Rockbridge Area. 
These same jurisdictions are presently investigating a regional 
approach, along with the Rockbridge Area, in the establishment of 
a recycling center that would serve the needs of all the citizens 
within the region. There are also discussions concerning, the 
possibility of a regional landfill as well. These are the same 
jurisdictions that comprise the Western Virginia Educational 
Consortium that is involved in a Tech Prep Program which advocates 
a life-long learning approach to education. These are a fair 
sampling of the cooperation that exists between these 
jurisdictions; there are other examples that are indicative of the 
commonality of the region such as shopping, cultural and 
recreational patterns. 



167 



By allowing the Rockbridge Area to be admitted to the 
Appalachian Regional Commission you would be of great assistance 
in ensuring that these projects and other levels of cooperation 
continue within the region of western Virginia. A cooperation that 
would benefit all of its citizens. 

If the Rockbridge Area is accepted in the Appalachian Regional 
Commission along with Roanoke and Montgomery County, that will 
further pave way for cooperation between members of the Appalachian 
Regional Commission with both the Blue Ridge Region organization 
and the Blue Ridge Region Economic Development Commission as 
established by the Virginia General Assembly in 1991. Rockbridge 
and Roanoke County have already cooperated in the area of tourism 
promotion and, yith our regional airport gateway being located in 
Roanoke, the ties between the two counties already exist, 
especially between the economic development organizations. 

With Virginia Polytechnic Institute and State University 
located in Montgomery County, the Rockbridge Area has continued to 
seek higher levels of cooperation, not only with Virginia Tech's 
economic development program offered through the Cooperative 
Extension Service--the Community Resource Development Program--and 
through the University's Public Service Program which includes the 
Economic Development Assistance Center, but with Montgomery County 
governments as well. There is a natural relationship that exists 



168 



4 
between these communities--Rockbridge, Roanoke and Montgomery 
County--with their neighbors just to their west who are already 
members of the Appalachian Regional Commission. Therefore, I 
respectfully request on behalf of all three jurisdictions 
comprising the Rockbridge Area--the County of Rockbridge, th-g City 
of Lexington and the City of Buena Vista--your support of this bill 
which will serve not only the Rockbridge Area but the entire region 
of western Virginia. 



169 

STATEMENT 

PRESENTED TO 



SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 
COMMFTTEE ON PUBLIC WORKS AND TRANSPORTATION 



FOR THE APPALACfflAN REGIONAL COMMISSION 



TUESDAY, JUNE 22, 1993 



ROOM 2167 RAYBURN HOUSE OFHCE BUILDING 
WASHINGTON, D. C. 



BY 

DAVID PATTERSON 
PRESIDENT 



TENNESSEE TECHNOLOGY FOUNDATION 

P. O. BOX 23184 

KNOXVILLE, TENNESSEE 37933-1184 

PHONE; 615/694-6772 

FAX: 615/694-6429 



170 



Testimony - Rouse Public Vorks Conmlttea 

Subconaittee on Economic Development 

June 22, 1993 

Hy name is David Patterson. I am President of the Tennessee 
Technology Foundation (TTF) , a small non-profit organization focused 
on technology-based economic development in Tennessee. The bulk of 
our efforts go to help new and existing small businesses get started 
and expand. We also work with other organizations, private and 
governmental, to encourage entrepreneurship, and expand the region's 
commercial application of the research and development resources at 
Oak Ridge and the University of Tennessee. The Tennessee Valley 
Authority, Martin Marietta Energy Systems, and Pellissippi State 
Technical Community College are all important cooperators with us in 
this effort. Most of our funding has come from the State of 
Tennessee . 

The Foundation was started in 1982 and the Appalachian Regional 
Commission provided our first infusion of funds the following year 
with a contract that yielded $1.2 million over a five year period. 
This was supplemented with $2 million from the State, which we have 
treated as an endowment, and periodic contracts from the State to 
cover the balance of our budget. Our ordinary expenditures have 
averaged about $400,000 per year for a staff of five, an occasional 
consultant, and part-time student interns from the University of 
Tennessee. There have been some extraordinary items in which the ARC 
was involved which I will describe in a moment. 



I 



171 



Was the Initial investment by the ARC a good one? It helped the TTF 
get started and was nanaged by ARC with an absolute Dinl&un of 
interference and no real bureaucracy. With ARC'S funding and the 
subsequent State funding, we, and a number of people in our region, 
believe the Foundation is doing that which it was intended to do. Of 
course, no one in the economic development business can claim full 
credit for success because, no natter the level of effort extended, 
success always depends on a number of other people (and luckl). But 
over 14,000 technology-based jobs have been created in the Oak 
Ridge/Knoxville Technology Corridor since 1983, and we believe a 
significant number of these are the direct or indirect results of the 
TTF. 

We are proud of a very significant increase in the level of 
entrepreneurial activity and general understanding of the importance 
of technology for the future of our region and the Nation. We have 
been moderately successful in helping small start-up firms obtain some 
of their capital needs, and in developing a few of the very important 
venture capital contacts they usually need to survive and grow. 
Judging by the number of entrepreneurs referred to us for help, 
usually by people with whom we have worked in the past, we have also 
been successful in our "hand-holding" activities with small 
businesses. 

Using ARC funds, TTF started and spun-off a non-profit research and 
development organization now called the Tennessee Center for Research 
and Development (TCBD) . TCRD now employs 3 5 people and operates 



172 



several centers — the most important of which are an Electric Power 
Research Institute (EPRI) Power Electronics Applications Center and a 
Power Quality Center. 

The TTF has designed and managed a promotion and support activity to 
encourage participation in the Federal Snail Business Innovation 
Research (SBIR) program. This has contributed to Tennessee realizing 
nearly $50 million in these small business research contracts since 
1983. Finally, I believe we have had some small hand in encouraging 
change in our State and local institutions with respect to their own 
understanding of and support for technology-based economic 
development, including the technology needs of snail and mid-sized 
manufacturing firms. 

Within the original workplan agreed to under the original ttf/arc 
contract was a charge to define the weaknesses of the local region. 
Three major weaknesses were identified and addressed by TTF. Two of 
these are referred to above: the lack of technical entrepreneurship, 
and near-total State and local lack of understanding of the economic 
development potential of the technology base offered by the University 
and the DOE Oak Ridge people and facilities. The third major weakness 
of the area is best defined as the near total lack of cooperation 
among the various cities and counties making up the Knoxville/Oak 
Ridge region. The very organization of the TTF, with a Board 
dominated by business and community leaders from the three largest 
counties, was an important step toward meaningful regional 
cooperation. Today, the region is working together on a number of 



173 



items of regional interest including the highway system, airport, 
marketing for industrial development, a foreign trade zone and support 
for continued funding for the Technology Foundation. And, now with 
the defense cutbacks affecting regional employment, there is the will 
and means for working together to mitigate those impacts that would 
not have been possible several years ago. 

TTF has also participated in other ventures with ARC — some of which 
have been more, some less, successful. They are worth soma detail 
because of the lessons learned. 

o The Foundation participated as the manager and "owner" 

of a building project at Tullahona, Tennessee. With funds 
provided by the State and ARC, TTF enabled a non-profit R&O 
organization to win an important contract with KASA. That 
organization, the Center for Space Technology and Applied 
Research (CSTAR) , now has about 40 employees and is clearly 
a success. The TTF was able to have an office/research 
facility constructed on time and under budget which we lease 
for $1 per year to CSTAR. We returned in excess of $13,500 
to the ARC (plus interest of more than $20,000 to the 
Treasury) upon completion of the project. This is another 
example of the best of ARC. They listened to the proposal, 
obtained cooperation with the Tennessee Valley Authority and 
the State of Tennessee, then let us go to work with the 
ninimum oversight required. 



J'i T T r» r\ 



174 



o TTF developed a proposal for the Tennessee Center for 

Research and Development to establish a Laser Technology 
Center and to develop a currlculun and perform technical 
training for laser technicians. The intent was to develop 
the pilot, test it here, then extend this sort of training 
through the comnunity college system as well as to other 
•mall colleges in the ARC region. The first step was 
accomplished successfully, but we clearly underestimated the 
difficulty and expense of accomplishing the remaining steps 
to extend this service to the larger region. At some point, 
I think this opportunity should be revisited, particularly 
with respect to upgrading the equipment and skills of those 
responsible for technical and scientific training and 
education throughout the region. 

I would like to conclude on two points. First, the ARC is an unusual 
non-bureaucratic Federal organization that is successful because it is 
based on cooperation with State and local government and other 
appropriate organizations. I am proud to have the opportunity to 
testify on its behalf. Second, I would suggest the ARC address 
additional efforts to promote the appropriate infrastructure to 
support technology-based economic development around its region. 

The ARC has helped communities a great deal by supporting efforts to 
improve the traditional sorts of infrastructure necessary for economic 
development— roads, sewers, water systems, etc. Technology is the 
driver for economic development of the present and the future. 



175 



Wh*th«r for so-called "high-tech" products or relatively prosaic ones, 
the firm that doesn't have technology in its process of manufacture or 
service may not survive or grow. The snail and middle-sized firms 
that dominate most of the Appalachian region need to be able to access 
technology easily. The colleges and technical schools need to be 
educating people to use technology, and the financial systems must 
somehow adapt to help firms invest in appropriate technology. There 
should be strong efforts to get wider participation by small firms in 
the Federal SBUt program. These are the infrastructure needs of this 
decade and, if they are not provided, the region will not fulfill the 
promise its people deserve. 



176 
STATEMENT 

PRESENTED TO 



SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 
COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION 



FOR THE APPALACHIAN REGIONAL COMMISSION 



TUESDAY, JUNE 22, 1993 



ROOM 2167 RAYBURN HOUSE OFnCE BUILDING 
WASHINGTON, D. C. 



BY 

JAMES W. ROBINSON 

CHAIRMAN, VIRGINIA BOARD OF HOUSING AND 

COMMUNFTY DEVELOPMENT 

KENTUCKY RIVER AREA DEVELOPMENT DISTRICT 

381 PERRY COUNTY PARK ROAD 

HAZARD, KENTUCKY 41701 

PHONE: 703/523-1522 

FAX: 703/523-2821 



177 



Testhnony of James W. Robinson 

to the 

House Public Works Subcommittee on 

Economic Development 

The Honorable Bob Wise, Chairman 

June 22, 1993 

10:00 aon. 



Good morning. Thank you very much, Mr. Chairman. It is a pleasure to be 
here to represent the citizens of Virginia's Appalachian region, particularly the 
coalHeld area of the Commonwealth. 

I am Jim Robinson, former banker with the Wise Coxinty National Bank and 
past Wise County representative in the Virginia General Assembly. I am currently 
Chairman of the Virginia Board of Housing and Community Development and 
Chairman of the Coalfield Economic Development Authority, a regional economic 
development marketing agency serving the coalfields of Southwest Virginia. 

Jobs in the coalfields are our number one priority. We cannot go it alone. 
ARC resources and funds are very instrvimental in helping us to improve our region. 
Jobs in the coalfields have been in a constant state of decline over the past decade. 
Coal mining employment in the three-coiuity area where I reside has gone from 
5,842 persons in 1982 to 3,571 at the present time, a decline of almost 40 percent. 
There have been corresponding declines in other employment sectors, since mining 
is still the greatest basic-sector employer. Also, this trend is indicative of conditions 
in neighboring West Virginia and Kentucky. 



178 

We certainly do not expect our federal government to be the aire-all for our 
economic problems. Through the Virginia Coalfield Economic Development 
Authority CVCEDA). we have created over 2.000 new basic jobs sine 1988. At least 
five of die projects we have funded have required ARC financial assistance for off* 
site infrastructure. That is why I think of ARC as an investment tool, and not 
another federal grant-in-aid program widi few tangible results. Because of ARC. we 
are beginning to o£fer new jobs to our people offering meaningful wages. The 
alternative is a life of dependence on variotis types of public assistance. Surely it 
makes more sense to invest through ARCs programs to allow us to help ourselves. 

Why is ARC so important to the Central ^palachian area I serve? While the 
o£5cial unemployment rate in the 21 Virginia ARC counties is about 9 percent, the 
rate in the seven Virginia coalfield counties is 11 percent. If discouraged workers 
were added (those who would otherwise be counted as members of the labor force, 
but have given up looking for employment because it simply doesn't exist), the true 
unemployment rate would be over 35 percent. 

Allow me to cite two recent examples of the way ARC projects work in 
conjunction with the VCEDA. The coalfield counties of Wise~my home county- 
and Dickenson moimted an aggressive campaign to recruit-yes, recruit-a maximimi 
security state prison. The two counties capitalized on a generous agreement from 
one of our local coal corporations to donate a large tract of land to the 
Cormnonwealth of Virginia for the prison. We are now finishing financing 

2 



179 



arrangements for nearly 3 million dollars in off-site water and sewer work, and over 
5 million dollars in access road improvements to support the prison. Although lc>cal 
public finances in the Appalachian region are in very short supply, at least cwo 
million dollars of local funds were committed. Other state and federal sources were 
also tapped, including a $500,000 ARC grant to assist with waterline construction. 
When this 52 million dollar facility opens in 1995, 350 new jobs will be available 
for an area that desperately needs economic growth. 

We are also presently working with a Fortune 500 company that would 
provide between 750 to 1,000 new manufacturing jobs in one of our counties. The 
company will be making a $30 million investment. We are presently proposing to 
utilize $500,000 in ARC assistance for some off-site improvements. Without these 
funds, VCEDA may not be able to land this project. You have no idea what a major 
impact such a project would have on the coalfield counties. 

These are just two recent projects. I haven't mentioned the changes brought 
by the ARCs Corridor Highway Program. Through my home county, ARC Corridor 
"B""bener known as U.S. 23"has broken the chain of isolation. We now feel like 
we're in the mainstream of commerce in this nation. Another local project of note 
is the regional industrial park in Duffield, Virginia-just 30 miles from my home. 
Here, total public investments of just 7 million dollars since 1969 (including some 
ARC funds) have yielded a 325-acre industrial park where 1,400 persons work each 
day. Before ARC, it was an empty and useless piece of property. Before ARC, those 

3 



180 

1,400 persons had no jobs. Because of that investment of 7 million dollars, over 
$50 million in private investment has been made there. Can you think of the 
federal taxes those 1,400 persons have paid over the last decade alone? The federal 
treasury has recovered that investment many times over in the ensuing years. Again, 
this park would have never happened without ARC and other federal programs. 

The people of the Appalachian Region want no more than a fair chance. The 
ARC program is a model of a local-state-federal partnership. The investments of 
scarce federal resources through ARC is a "bottom-up" approach that allows us to 
apply ARC funding to the projects that have the best chance of improving our 
economy. We are working hard to help ourselves, to build capacity, to find 
resources to invest in our future. 

The Appalachian Regional Commission was identified over 30 years ago as 
a target area for federal assistance. We have historically ridden an economic roller 
coaster that unfortimately has many more downs than ups. Without ARC, I am 
certain conditions would be much worse than they are now. Also, the ARC is 
relatively insignificant dollar-wise considering the overall federal budget. That is 
why I urge Congress and the Administration not to abandon a region that is trying 
to pull itself up by the bootstraps. The Appalachian Regional Commission is our 
best hope-a vmique tool for reinvigorating Appalachian Virginia. .. 

Thank you very much. I would be pleased to answer any questions. 



181 



STATEMENT OF FRED VANKIRK 

DEPUTY SECRETARY AND 

STATE HIGHWAY ENGINEER/ COMMISSIONER 

WEST VIRGINIA DEPARTMENT OF 
TRANSPORTATION, DIVISION OF HIGHWAYS 

ON 



REAUTHORIZATION OF THE 
APPALACHIAN REGIONAL COMMISSION 



Prepared for Presentation Before the: 

U S HOUSE OF REPRESENTATIVES 

PUBLIC WORKS AND TRANSPORTATION 

COMMITTEE 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 

WASHINGTON, DC 
JUNE 22, 1993 



182 



IN'rHODPCTI ON 

Mr. Chairroan, members of the Comniitcee, I am Fred VanKirJc, 
C o mm issioner of the Division of Highways and Deputy Secretary of 
the West Virginia Department of Transportation. I am honored to 
appear b«fora the Committee to express our support for the 
activities of the Appalachian Regional Cc»inlssion and its programs, 
most especially its Development Highway Program. As the ARC nears 
thirty (30) years of existence, its achievements over that period 
of time have greatly transformed the transportation system, both in 
West Virginia and throughout the Appalachian region. Much has been 
accomplished; unfortunately, much also remains to be done. 

BAaCGHOOKD 

One of the major factors that has contributed to the economic 
stagnation of the Appalachian region has been its geographic 
isolation. The rugged terrain made providing highway facilities 
difficult and expensive, and they typically followed river and 
valley courses or ridge lines. The resulting facilities, mostly 
two lanes, had to be squeezed into available spaces, and were 
characterized by extensive curvature and grades, low travel speeds, 
long travel distances caused by indirection, and poor safety 
records . 

with the exception of rail facilities necessary for extractive 
industries such as coal, timber and petroleum, major 
transportation corridors tended to bypass the more mountainous 
regions of Appalachia. One of the nation's earliest public works 
projects, the National Road, a course later followed by uS 40 and 
then 1-70, barely touched our state in its Northern Panhandle area 



183 



at Whealing. The idea of ending this econc»nic isolation through 
the development of adequate transportation facilities was conceived 
by a group of eastern governors in the early 1960 's. Following 
discussions with the Kennedy Administration, the concept reached 
fruition with the establishment of the Appalachian Regional 
Conmission in 1965 under President Johnson. 

Although marking out a single geographic region for special 
treatment to enhance its economy may appear to be a unique 
approach, it has its precedents in our past, notably the Tennessee 
Valley Authority, the development of the west by inducements to the 
railroads, and the establishment of irrigation and water supply 
systems in our western states. The most distinguishing aspect of 
the Appalachian Regional Commission during its history has been its 
unique federal -state partnership with both parties working together 
to identify problems and potential solutions on an equal footing. 

PORPOSg 

The Appalachian Regional Development Act of 1965 authorized 
the Secretary of Transportation to assist in the construction of a 
development highway system and local access roads which would, in 
conjunction with the Interstate System and other Federal -aid 
highways, open up areas with development potential where commerce 
and communication have been inhibitad by lack of adequate access. 
The Act recognized that the provision of highways alone would not 
guarantee economic and social growth in the region, but it noted 
that good access to national markets was an essential prerequisite 



2 



184 



to growth. Thus, the Act also included provisions for upgrading 
health, education and community services and for housing, 
recreation and community development. Rather than operating in a 
single mode, the Conmisaion has attempted to use an integrated, 
comprehensive approach to development in the Appalachian region. 

STATUS 

As Table #1 shows, almost three quarters (3/4) of the 
Appalachian Development Highways have been completed in the twenty - 
eight (28) year life of the Commission. After a promising start, 
construction activities were greatly curtailed in the 1380 's by 
funding cutbacks and attempts to eliminate the ARC. Highway 
funding in 1981 was in excess of two hiindred million dollars ($200 
million) ; by the late 1980 's this had been reduced to the sixty to 
seventy million dollar ($60-70 million) range for the entire 
thirteen (13) state region, with construction costs in excess of 
ten million dollars ($10 million) per mile in West Virginia, 
allocations had to be husbanded carefully to keep the construction 
program alive. 



185 



TABLE # 1 

APPAIACHIAN DF/ELOPMENT HIGHWAY PROGRAM 

CUMULATIVE MILEAGE SUMMARY 

AS OF SEPTEMBER 30, 1992 







ccNsraucTioN 


RSMAINIIJG MILES TO 


STATE 


CONSTRUCTION REQUIKEO 


COMPL2TED OH ONDERWAY 


COMPLgTE 


AL 


232.4 


126.1 


106.3 


OA 


131.9 


101.5 


30.4 


tn 


431.7 


367.7 


64.0 


MD 


83.2 


77.0 


6.2 


MS 


IIS.S 


82.1 


34.7 


NY 


219.5 


204.1 


15.4 


NC 


203.6 


1SS.7 


47.9 


on 


201.6 


146.0 


55.6 


PA 


4S4.4 


233.7 


220.7 


sc 


Z2.9 


16.6 


6.3 


TN 


327.8 


268.1 


59.7 


VA 


191.3 


154. 4 


36.9 


WV 


411.0 


283.7 


127.3 


AOHS 




2,216.7 


811.4 


TOTAI. 


3,028.1 







In Wesc Virginia there are four (4) major areas of activities 

for the Development Highway System: 

1) Appalachian Corridor H from 1-79 to 1-81 in Virginia - 
work has been concentrated on the western portion of this 
route while a final alignment was being evaluated in an 
environmentally sensitive area. With the selection of a 
recommended alignment this spring, we are ready to 
proceed with development of this route. 

Appalachian Corridor G from Kentucky to I -64/1 -77 in 
Charleston - less than twenty (20) miles remain to be 
con5>leted on this route vitally important to our southern 
coalfields. The remaining sections will soon be constructed. 



2) 



186 



3) Appalachian Corridor D from Ohio to 1-77 in the Parlcersburg- 
B«lpr« area • a draft Environmental impact Statement is 
currently being prepared for this section oC roadway. 

4) 0p9radin9 of the northern sections of corridor L from t«fo 
laaes to four lanes - at the time of its design vid 
construction, four lanes could not be justified by the 
anticipated traffic on the northern section of this route. 
Since that tiiBC traffic has grown phenomenally (121% from 1979 
to 1991) because the route serves as a more direct connection 
between Z-77 and 1-79 for north -south travel. If anyone 
should doubt the regional importance of the Appalachian 
Highway System. I would invite that person to travel this 
route and witness the number of trucks and ouc-of-state 
vehicles . 

BgHgyiTS 

One of the most significant benefits of the Appalachian 
Highway System has been the decrease in travel times resulting from 
the improved highway geometries on the corridors . Table 1^2 shows 
typical time savings for trips from selected points in west 
Virginia to its borders. 



187 







TABLE t»2 










ntOM SBLScrsD crrzss m wbst vaannx to stxtb soion 








Dxsomxca 


Mnaa 


QKSZAL 


TUB 


anoiioa 


SAVlBei 

(MXinrai) 


Carridar 


S«ata Lisa 


H 


M 


•) 


1*1 


J«- 




Cnrrl*T I 

(BOH I-««I 


WTganrmm to 


31.1 


It 


IS 


34 


l« 




CoczldBr 3 


CbarlaKoa ta 
XaetneicY Jtac» Una 

(UlUliaMm) 


7» 


«• 


90 


147 


S7« 




Carrldar I 


Waarat u Vlnlata 
staca :,iiia 


134.7 


132 


IS2 


227 


7»» 




Carrldor L 


lacJUar ta 1-79 


«».T 


lis 


7C 


173 


97 




eurtiaor g 


Uaariaxa ca 
vizqlala luta Uaa 


JT 


2* 


]• «3 


U 





Equally iniportant has been the increased in highway safety for 
users of the APD highways. Their accident rate was thirty -nine 
percent (39%) that of the rural two-lane highways that they 
replaced (99 versus 251 accidents per one hundred million [100 
million] vehicle miles of travel) . This translates to twenty -six 
hundred (2600) fewer accidents per year with a resultant decrease 
in injuries, fatalities and societal costs. If the system were 
complete in West Virginia, such a difference in rates could result 
in thirty -one hundred (3100) fewer accidents per year. 

While many areas of increased economic activity can be 
identified throughout the region. I would li)ce to reference a few 
specific advantages the Appalachian System has given west Virginia. 
Appalachian Development Highway Corridor "E" in west Virginia has 
recently been designated "Interstate 68" through Wast Virginia and 
Maryland. while this route runs through a rural area in West 



188 



Virginia it is expected to ba of great benefit to the economic 
development of western Maryland. Also, it provides a high type 
transportation facility that will tie the proposed Mon-Valley 
Expressway into Pittsburgh, Pennsylvania from West Virginia. As 
noted earlier, Appalachian Corridor "L" has provided invaluable 
relief to the Interstate System in central West Virginia by serving 
as a bypass of Charleston, wast Virginia and serving long distauice 
traffic with termini north of Sutton on 1-79 or south of aeckley on 
1-77. This Appalachian Corridor has served such a significant 
transportation need that it is now being upgraded to four lanes for 
its entire length. 

Even as we speak a major retail, commercial and governmental 
development is being completed immediately south of Charleston on 
Appalachian Corridor "G." In addition to retail stores (Wal-Mart. 
Sam's Club, the states largest Lowes), the development will also 
contain office space and areas for light industry along with a 
regional detehtioa facility and USPS mail sorting facility. 
Initial employment applications were taken last week for the first 
store to be opened; 300 to 1000 persons applied on the first day 
for the 240 available positions. It is impossible to believe that 
the owners would have spent the millions of dollars necessary to 
develop the site without the improved accessibility provided by 
Corridor "G. " 

In addition. Corridor "H, " when completed, has the potential 
to become the most beneficial corridor of ail to the state and 
region. It will provide an excellent access from the Washington- 



189 



Baltimore area to the recreational and scenic areas of West 
Virginia and the industrial base of the Ohio Valley. The potential 
banafits are inmeasurable. 

FOTORB OF THB ARC 

At the time the ARC was created it was assumed that the 
economic bases of the region would remain 'onchanged for a 
generation or more. West Virginia would continue to rely on coal, 
primary metals, chemicals, and glass with a gradual diversification 
into business such as textiles, light manufacturing and components 
for items such as automobiles and appliances. 

No one foresaw the blossoming of the Sun Belt and the decline 
of the Rust Beit or the shift of manufactiiring activity to the 
Third World as our economy became increasingly global in nature. 

-■There have been fundamental changes in the practices of 
industry in transportation over the past decade. The concept of 
"just in time" delivery, popularized by the Japanese and adopted by 
manufacturers in this country such as the Saturn plant in Tennessee 
has placed increasing demands on the highway system. 

What began twenty -eight (28) years ago as an effort to provide 
the framework for coordinating federal, state and local initiatives 
to respond to economic competitive challenges has provided an 
outstanding model of such cooperation. The original intent and 
purpose of this effort could not have been better structured to 
meet the challenges of today. The ability of the United States to 
compete in an international market requires, in fact demands , that 



8 



190 



every part of our nation, participate in an economic, mutually 
supportive way. 

It follows, therefore, tiiat our nation must include every area 
in its economic base if we are to maximize all of our potential. 
Appalachia, comprising two hundred thousand (200,000) square miles 
and a significant percentage of our population, must not be 
excluded from that base. Thus, if this area is to become fully 
integrated into our economic foundation and function in the 
industrial and service environment, transportation facilities are 
absolutely essential. 

CPNCLaSIOK 

As we reflect upon the original intent of the legislation 
which created the program and looJc to the future, one basic 
principle should be realized. The intent of the program was, and 
is, to provide transportation service facilities not addressed in 
the nomal efforts of federal, state and local governments. 
Rather, the need to provide transportation facilities in this 
region that go beyond conventional highway trust fund programs was 
fundamental. That premise remains true today for those facilities 
remaining to be completed. 

It is, thus, of significant interest to our nation to continue 
the Appalachian Program. The states cannot, within their limited 
resources and noraal federal programs, build projects unilaterally 
of this magnitude. Without the completion o£ this vital highway 
system, the full potential for continued growth and development. 



191 



and for ioiprovemenc in social conditions in Appalachia, will noc be 
achieved. The Appalachian Regional Cononission can function to 
focus efforts on development in this region and to aggressively 
pursue the completion of this much needed highway system. Failure 
to continue the program to a timely completion will result in a 
regression of the accomplishment achieved in the last twenty-eight 
(28) years. Thus, the investment committed to the thirteen (13) 
state regions icnown as Appalachia will not achieve the potential 
intended. 

ThanJc you very much. 



10 



192 



U.S. House of Representatives 
Economic Development Subcommittee 

Tuesday, June 22, 1993 
10:00 AM 

E. Randall Went 

Deputy Assistant County Administrator 

Montgomery County. Virginia 



It is a privilege for me to address this Subcommittee on behalf of the Montgomery County 
Board of Supervisors and the citizens of our County. I am here in support of House Resolution 
1451 which seeks to include Montgomery County, Virginia in the Appalachian Region so that 
the County may qualify for programs administered by the Appalachian Regional Commission. 
This action was requested by resolution of the Montgomery County Board of Supervisors in 
October 1991. 

Nestled between the Appalachian Plateau and the Blue Ridge Mountains. Montgomery 
County, a community of 74,000 people, is geographically a part of the Appalachian Region. Our 
cultural heriuge is that of hard-working discipline, hearty survivorship and a strong work ethic 
which the Appalachian people have come to represent Not surprisingly, the economic 
development goals of Montgomery County are those of the ARC: to provide our citizens with 
the education and skills needed to compete worldwide for economic opportunities; to diversify 
our economic base; and to protect our environment so that we can support a population with 
enhanced job opportunities, increased incomes, and improved standards of living. 

Although Montgomery County is blessed with an abundance of natural resources and 
creative people, our unemployment, poverty and income dau indicate that a number of our 
citizens are not sharing in the American dream. Indeed, our County is a study in contrasu. 
Home to Virginia Tech, the largest university in Virginia, the Town of Blacksburg in 
Montgomery County has been recognized as having the fourth highest concentration of Ph.D.'s 
per capita in the nation. Yet, in 1990. 26 percent of all Montgomery County residents aged 25 
and over did fifil have a high school education, and in the more rural areas of the County this 
figure exceeded 50 percent. 

While Montgomery County has seen continued population growth through the decades - 
- 16 percent growth during the 1980s -- employment opportunities have not been able to keep 
pace with the growing labor force. The result is increasing unemployment As an illustration, 
throughout the early 1980s, the unemployment rate in Montgomciy County remained below the 
national average, but by 1986 it met the national average and then surpassed it in 1988. During 
1992, Montgomery County's unemployment rate averaged 8.3 percent, compared with a national 
average of 7.4 percent. 



193 

0- -HTeo««v CO. ecoH. o.«. 



Acconiing to the 1990 Census, over 14.000 persons, representing 22 percent of the 
population, had incomes below the poverty level during 1989; this is an increase of 2 percentage 
points and 3.S00 people over the 1979 figures. The 1990 Census also revealed the County's per 
capita inconie was only $10,979 during 1989. 

For a number of yean. Jurisdictions in our region have worked cooperatively to assure 
improved services to our residentt. We know how valuable regional efforts, as emphasized by 
the ARC are to local governments. 

Recently, a critically needed tool and die training program was established at New River 
Community College with the assistance of a $200,000 ARC grant Montgomery County 
economic development staff had worked diligently for a number of years to see this effort 
become a reality. Regrettably, we could not participate as an applicant since the County was not 
within the defined Appalachian Region. 

Over the past three decades Montgomery County has attempted to address social welfare 
needs and provide economic opportunities for all of iu citizens. Although many gains have been 
achieved by taking this course, the County recognizes that inclusion in the Appalachian Region 
at this time would greatly assist us in the goal of equipping our citizens with all the tools needed 
to attain comprehensive, balanced and enduring economic development objectives. 

Geographically and economically. Montgomery County is a candidate for inclusion in the 
Appalachian Region. Our citizens' quality of life would greatly benefit from the housing, health, 
educational. transporUtion. infrastnicture and environmental opportunities that are available 
through the programs administered by the ARC. On behalf of the Boanl of Supervisors and 
citizens of Montgomery County. I respectfully request that members of this subcommittee 
recommend House Resolution 1451 for approval so that Montgomery County can join with 21 
other counties and 5 cities in the Commonwealth of Virginia which are presently included in the 
Appalachian Regional Commission. 

Thank you for the opportunity to address the subcommittee on this issue of critical 
importance to the citizens of Montgomery County. This concludes my verbal remarks; however, 
I would like to submit for the record written testimony which includes the text of the 
Montgomery County Board of Supervisors' resolution requesting inclusion in the ARC and a 
1991 economic report which provides more detail on Montgomery County's economic condition 
and trends. 



194 

STATEMENT 

PRESENTED TO 



SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 
COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION 



FOR THE APPALACHIAN REGIONAL COMMISSION 



TUESDAY, JUNE 22, 1993 



ROOM 2167 RAYBURN HOUSE OFFICE BUILDING 
WASHINGTON, D. C. 



BY 

GORDON WHITENER 
VICE PRESIDENT OF MARKETING 



COLLINS & AIKMAN CORPORATION 
FLOOR COVERINGS DIVISION 

311 SMITH INDUSTRIAL BOULEVARD 

P.O.BOX 1447 

DALTON, GEORGIA 30722-1447 

PHONE: 706/259-9711 

FAX: 706/259-2192 



195 

REMARKS 8Y GORDON WHITENER 

TO THE ECONOMIC DEVELOPMENT SUB -COMMITTEE 

OF THE PUBLIC WORKS COMMITTEE 

UNITED STATES CONGRESS 

JUNE 22, 1093 

MR. CHAIRMAN, LET ME BEGIN BY SAYING THANK YOU FOH THE 
OPPORTUNITY TO REPRESENT MANY FINE PEOPLE FROM THE DALTON, GEORGIA 
AREA. IT IS AN HONOR FOR ME TO COME BEFORE THIS SUB-COMMITTEE AND 
PRESENT OUR APPRENTICESHIP PROGRAM. I WANT TO START BY 
RECOGNIZING THE THREE MOST CRITICAL ELEMENTS OF OUR PROGRAM: 1) 
THE DALTON PUBLIC SCHOOL SYSTEM, 2) THE APPALACHIAN REGIONAL 
COMMISSION AND OF COURSE 3) THE CARPET INDUSTRY INCLUDING SPECIAL 
APPRECIATION TO COLLINS & AJKMAN. I AM PARTICULARLY GRATEFUL TO 
MR. CHARLIE EITEL, PRESIDENT OF C 1 A FLOOR COVERINGS, FOR GIVING 
ME THE FREEDOM TO BE A CATALYST BY STARTING UP AND PARTICIPATING 
IN PROGRAMS LIKE THE ONE I AM PRESENTING TO YOU TODAY. AND MOST 
GRACIOUS AND LOVING THANKS TO MY WIFE, GEORGEANN FOR HER SUPPORT. 

INDUSTRY AND EDUCATION SHOULD WORK TOGETHER, NOT TO SAVE 
EDUCATION, BUT TO TAKE LEARNING TO A NEW LEVEL. WE ARE IN A 
CRITICAL TIME IN AMERICAN BUSINESS. STRONG FOREIGN COMPETITION IS 
PRESENT IN EVERY INDUSTRY, AND WE HAVE NO CHOICE BUT TO FIGHT TO 
WIN. WHEN PLANNING THE ULTIMATE STRATEGY FOR GLOBAL COMPETITION, 
THE OBVIOUS PUCE TO FOCUS IS EDUCATION. AMERICAN BUSINESS HAS, 
AND WILL CONTINUE TO HAVE, A FIDUCIARY RESPONSIBILITY TO GET 
INVOLVED IN EDUCATION. IN ADDITION, EDUCATORS WTI.L HAVE A 



196 



RESPONSIBILITY TO TAKE A PROACTIVE POSITION IN THE SEARCH FOR 
BUSINESS PARTNERS. OUSINCGG CXCCLLENCE IN AMERICA WILL TAKE A 
TOTAL TEAM EFFORT. 

THE NATIONAL ASSOCIATION OF MANUFACTURERS, IN A NOVEMBER 1991 
REPORT, ESTIMATED THAT "THE AVERAGE MANUFACTURER REJECTS FIVE OUT 
OF EVERY SIX CANDIDATES. IVfO-THIRDS OF COMPANIES REGULARLY REJECT 
APPLICANTS AS UNFITTED FOR THE WORK ENVIRONMENT; A THIRD REGULARLY 
REJECT APPLICANTS BECAUSE THEY CANNOT READ OR WRITE ADEQUATELY; 
AND ONE FOURTH REJECT APPLICANTS BECAUSE OF POOR COMMUNICATION AND 
MATH SKILLS." IN ADDITION, THESE SAME MANUFACTURERS CONVEY "MAJOR 
EMPLOYEE SKILLS DEFICIENCIES IN OASIC MATH, READING AND PROBLEM- 
SOLVING IN THCIR EXISTING EMPLOYEE POPULATIONS." THE SAME SUHVhY 
REVEALS THAI "MORE THAN 60 PERCENT OF COMPANIES CLAIM THAT PART- 
TIME, ON-SITE WORK EXPERIENCE IS THE MOST IMPORTANT SCHOOLWORK 
LINKAGE, BUT FAR FEWER COMPANIES ARE ACTUALLY INVOLVED IN THESE 
PROGRAMS." AND FINALLY THE SAMF SllIDY, DISCOVERED THAT 'SMALLER 
COMPANIES ARE AT MUCH GREATER RISK THAN OTHERS FROM LABOR 
SHORTAGES AND SKILLS GAPS IN THE APPLICANT POOL AND EMPLOYED WORK 
FORCE. • THIS LAST STATEMENT IS IHt ONE THAT I THINK IS THE MOST 
DAMAGING BECAUSE, AS YOU KNOW, MOST JOBS ARE CREATED BY SMALL 
BUSINESS. NOW, I REALIZE THAT THE MEMBERS OF THIS COMMITTEE ARE 
DELUGED WITH STATISTICS ON EDUCATION AND OTHtH SUBJECTS. BUT 
THERE IS ONE STATISTIC THAT I WANT YOU TO REMEMBER. WHEN WE 
DISCOVERED THAT MORE THAN ONE THIRD OF OUR EMPLOYEES AT COLLINS & 
AIKMAN DID NOT HAVE A HIGH SCHOOL DIPLOMA, WE KNEW WE MUST DO 
SOMETHING ABOUT IT. IT DOESN'T TAKh A TOP-NOTCH INDUSTRY ANALYST 



197 



TO SURMISE IHAT A COMPANY CANNOT CONTINUE TO COMPETE GLOBALLY WHEN 
MORE THAN ONE THIRD OF ITS WORK FORCE IS COMPRISED OF HIGH SCHOOL 
OnOP-OUTS. SO, THE BIO QUESTION IS HOW DO WE RESPOND 10 THIS 
CRISIS? 

I HAVE BEEN A VERY FORTUNATE MAN. MY MOTHER AND FATHER ARE 
OREAT PARENTS AS WELL AS WONDERFUL ROLE MOUHS. I AM BLESSED TO 
HAVE BEEN REARED IN THE DALTON PUBLIC SCHOOL SYSTEM AND IN A 
COMMUNITY THAT GENUINELY CARES ABOUT ITS OWN. FOR THESE REASONS, 
I HAD LONO FELT THE NEED TO GIVE SOMETHING BACK TO THE SCHOOL 
SYSTEM AND THE COMMUNITY. I HAD DISCUSSED SOME BROAD IDEAS WITH 
A CLOSE FRIEND AND THE ONE NEGATIVE THAT HE REVIEWED WITH ME WAS 
THAT I WOULD MOST LIKELY RUN INTO A BUREAUCRATIC NIGHTMARE ONCE I 
TRIED TO GET INVOLVED WITH MY PUKLIU SCHOOL SYSTEM. BUT WHEN I 
WENT DIRECTLY TO THE DALTON PUBLIC SCHOOL SUPERINTENDENT, FRANK 
THOMASON AND SHARED MY VISION. HE WAS VERY RECEPTIVE. HE THEN 
INTRODUCED ME TO THE DALTON HIGH SCHOOL PRINCIPAL, DR. JOHN 
MCMILLAN. I MET WITH DR. MCMILLAN SEVERAL TIMES AND IT WAS 
OBVIOUS THAT THIS MAN WAS ONE OF THE MOST FORWARD THINKING 
INDIVIDUALS I HAD EVER MET. 

MY MAIN IDEAS REVOLVED AROUND THE FACT THAT I CAME THROUGH 
SCHOOL IN DALTON AND NEVER REALLY HAD A GRASP OF WHAT THE CARPET 
INDUSTRY WAS ALL ABOUT . THE BASIC MYTH WAS THAT YOU EITHER OWNED 
A CARPET COMPANY OR YOU WORKED ON A TUFTING MACHINE. WE NEVER 
DISCUSSED THE INDUSTRY OR ANYTHING ABOUT IT DURING SCHOOL. I 
CHOSE TO FOCUS UY EFFORTS ON THIS DEFICIFNCY. IN THE SPRING OF 



198 



1001, I PUT TOGETHER A CROUP Of INDIVIDUALS WC CALLED THC DALTON 
PLAN: INDUSTRY AND EDUCATION WORKING TOGETHER. THIS GROUP WORKED 
HARD TO START SEVERAL PHASES OF THE OVERALL PROGRAM WE ULTIMATELY 
NAMED "INSIDE TRACK'. WE HAVE HELD A CARPET CAREERS WEEK, HAD 
TEACHER/EMPLOYEE EXCHANGES, CREATED DISPLAY WINDOWS TO SHOWCASE 
THC CARPET INDUSTRY, HELD I EAOERSHIP SEMINARS FOR SENIORS AND 
STARTED THE APPRENTICESHIP PROGRAM. 

THE APPRENTICESHIP PROGRAM HAS UtKINITELY BEEN THE MOST 
REWARDING BECAUSE WE CREATED JOBS. DR. MCMILLAN, ALONG WITH HIS 
COLLEAGUES, WENDY HANSON AND MARY SMITH HAVE ALL GIVEN A GREAT 
DEAL OF THEIR TIME TO MAKE THIS AN EFFECTIVE PROGRAM. THE MAIN 
DRIVING FORCF BEHIND OUR APPRENTICESHIP PROGRAM WAS TO GIVE 
STUDENTS AM 'INSIDE TRACK' TO A BETTER CAREER. 

I WANT TO SHARE TWO STORIES ABOUT OUR APPRENTICES WITH YOU. 
ONE IS ABOUT ALONZO WASHINGTON AND 1HE OTHER IS ABOUT GODFREY 
POPE. THESE TVIO YOUNG MEN PERSONIFY WHAT THIS PROGRAM IS ALL 
ABOUT. I WAS INTRODUCED TO ALONZO IN LATE FALL OF 1991. HE WAS 
EXTREMELY SHY. DR. MCMILLAN ASKFI) Mb TO CONSIDER ALONZO FOR OUR 
FIRST APPRENTICESHIP. ALONZO HAD JUST RECEIVED ONE OF THE HIGHEST 
SAT SCORES IN THE SYSTEM AND WANTED TO BE AN ENGINEER. HE HAD A 
VERY DIFFICULT HOME LIFE AND WAS WORKING AT A FASI FOOD RESTAURANT 
FROM AFTER SCHOOL UNTIL VERY LATE AT NIGHT. I INTERVIEWED HIM AND 
WE HIRED HIM ON DECEMBER 30, 1991. WITHIN DAYS OF HIS ARRIVAL AT 
COLLINS & AIKMAN, HIS MANAGER INFORMED MC THAT ALONZO WAS SPECIAL 
AND THAT HE HAD THE APTITUDt 10 ACCOMPLISH ANYTHING HE WANTED IN 
THE ENGINEERING FIELD. HE MADE AN IMMEDIATE POSITIVE IMPACT ON 



199 



THE DEPARTMENT NOT ONLY IN PRODUCTIVITY, BUT IN THE FACT THAT 
EVERYONE HAD AN INTEREST IN SEEINQ ALONZO SUCCEED. ALONZO 
GRAOUATED HIGH SCHOOL IN THE SPRING OF 199? ANU l-NTFREO GFORQIA 
TECH. HE CONTINUES TO WORK FOR US ON BREAKS AND IN THE SUMMER AND 
WILL BE OFFERED A POSITION WHEN I IE I IAS GRAOUATED FROM COLLEGE. MY 
PREDICTION 1$ THAT WE WILL HAVE TO MAKE MIM AN ATTRACTIVE OFFER TO 
GET HIM BECAUSE I THINK HE WILL BE HEAVILY RECRUITED BY MAJOR 
COMPANIES EVERYWHERE. 

THIS MEXT STORY IS ABOUT GODFREY POPE. GODFREY, WHO WAS 
SOCIALLY WITHDRAWN AND A BELOW AVERAGE STUDENT, ATTENDED ONE OF 
•INSIDE TRACK'S" SENIOR LEADERSHIP SEMINARS. AFTERWARDS,. GODFREY 
TOOK THE SEMINAR SPEAKER (WHO HAPPENED TO BE COLLINS & AIKMAN 
FLOOR COVERINGS PRESIDENT, CHARLIE EITEL) ASIDE AND TOLD HIM HE 
WAS INSPIRED BY THE SPEECH AND WANTED TO KNOW MORE ABOUT 'INSIDE 
TRACK.' GODFREY BECAME AN OBVIOUS CHOICE FOR THE APPRENTICESHIP 
PROGRAM AND COLLINS k AIKMAN. HE STARTED WORK ON NOVEMBER 4, 1092 
IN OUR DISTRIBUTION AREA AND NOW HAS AN OSHA APPROVED OPERATOR'S 
LICENSE FOR LIFT TRUCKS. ONE EXCITING NOTE IS THAT GODFREY MADE 
THE HONOR ROLL HIS LAST SEMESTER AT DALTON. HE HAS NOW GRADUATED 
AND PLANS TO ATTEND COLLEGE AND HAS A GOAL TO BECOME AN ELECTRICAL 
ENGINEER. WE HAVE OFFERED HIM THE SAME EMPLOYMENT OPPORTUNITIES 
AS ALONZO. THESE TWO CASES PORTRAY THE IMPORIANCE AND 
EFFECTIVENESS OF AN APPRENTICESHIP PROGRAM AND HOW IT CAN HELP 
BOTH INDIVIDUALS AND COMPANIES. 

IN CLOSING, I WANT TO TELL YOU THAT WE ARE MOST SATISFIED. 



200 



WE PLAN TO GROW THIS PROGRAM. BUT, THIS PROGRAM WOULDN'T HAVE 
BEEN POSSIBLE WITHOUT THE COOPERATION OF THE APPALACHIAN REGIONAL 
COMMISSION. WE DID NOT EXPERIENCE ANY OF THE BUREAUCRATIC RED 
TAPE YOU HEAR SO MUCH ABOUT. IN FACT, I WOULD LIKE TO PUBLICLY 
COMMEND THE APPALACHIAN REGIONAL COMMISSION FOR THEIR EFFICIENCY 
IN HANDLING OUR REQUESTS. 

WE ARE EXPANDING BOTH INSIDE AND OUTSIDE THE CARPET INDUSTRY. 
A WORKPLACE READINESS CLASS WILL BE ADDED TO THE CURRICULUM AND WE 
PLAN TO STUDY THE POSSIBILITY OF MAKING THIS A YEAR ROUND PROGRAM. 
THERE ARE MANY MORE WONDERFUL STORIES, BUT TIME PROHIBITS ME FROM 
SHARING THEM TODAY. I WILL BE HAPPY TO SPEAK FURTHER WITH ANYONE 
REGARDING OUR EFFORTS. 

THANK YOU FOR THIS TIME AND I'LL BE HAPPY TO ENTERTAIN 
OUESTIONS. 



201 



A^^ BtHE DALTOH PIAM; INDHSTRY and EPnCATION WORKIMG TOGETHER 

^B^^^^^r by Gordon Whitener 

INSIDETRACK industry and Education should work together. Not to save 
education, but to take learning to a new level. We are in a 
corfcvvwcn.:. critical time in American business. Strong foreign 

ColUiu 4; Aiktrao 

FnnkThomason cofflpetition Is prBssnt in every industry, and we have no 

DiUon Public Schools 

D. John McMiiibn choicB but to fight to win. When planning the ultimate 

Dillon High School 

strategy for global competition, the obvious place to focus 

Ddlon High School 

is education. American business has and will have a fiduciary 

Ronnie Boohci 

Dillon Hieh School _ . ,,.^. 

responsibility to get involved in education. In addition, 

Wendy Hinson 

DiiionHighsc oo Education will have a responsibility to take a proactive 

Jewell Dale 

Dillon High School position in the search for business partners. Business 

Robin Manin 

Dii»nH,eh School excellence in America will take a total team effort. 

RidiBell 

coiiins&Aikman p^j. ^hese Teasons we decided to create a partnership 

Dobbins Callahan' 

Collins &Aikman called The Dalton Plan: Industry and Education Working 

Hank Milbaps 

Collins (cAiTcman Together. In Dalton, we have a unique situation. We are 

SmiHicks , , 

caipei&Ruginsiiiute fortunate to have a wonderful industry m carpet, and we have 
outstanding schools. This .scenario would be enough for most 
communities, but in Dalton there has always been a drive to 
be the best. From high school football to the carpet 
industry, we have always been a leader. That is w"hy it is 
natural to implement the plan we call Inside Track . 

Inside Track is a program that will utilize the talents 
from both the carpet industiry and Dalton' High School to 
enhance the career opportunities for the student (customer) . 
This program targets all students, gifted as well as non- 
gifted, coUege bound and those who will not attend college. 



Keilh McLoughlin 

E.I. DuPoni 

De Nemouis & Company 



The Dallon Plan: 
Indu5tr> and Educadon 
Working Togcthel 

1500 Manly Sncel 
Dalcon. Ceoqpa 307ZO 
404.278.8757 



202 



INSIDETRACK 



DALTON HIGH SCHOOL 

"INSIDE TRACK PROGRAM" 

CARPET CAREER DEVELOPMENT PLAN 



Keith Mct,ouehlin 

E.I. DtiPont 

De Nemoun 6c Company 



Career guidance at the high school level should provide a variety 
of activities to meet the needs of students at various stages of 
development. Research studies indicate that students this age are 
limited in their ability to assess their ow/i skills and interests. Also, 
that they have a limited awareness of career opportunities and 
requirements. This can be especially true for special populations, such 
as women, minorities, and the handicapped. Several general areas of 
career development which are appropriate to address at the high school 
level are career awareness, individual assessment, career exploration, 
and career training. 

The "Inside Track" program is one that utilizes the talents of both 
carpet industry and Daiton High School personnel to enhance career 
opportunities for the student. Through a partnership between the 
school and Collins & Aikman, several activities have been implemented 
and more are planned for the future. Overall goals of the program are: 



The Dtlion Pbn: 
Industry and Education 
Woflting Together 

ISOO Manly Stmt 
Dillon. Gcoripa 30720 
404.278.8757 



203 



1 . to increase students' knowledge about careers available in 
the carpet industry. 

2. to enhance the role of industry within our school. 

3. to provide students with a better understanding of the 
relationship between school subjects and future careers. 

4. to assist teachers to make their instruction more relevant to 
the world of work. 

The Carpet Career Development Plan, as a part of our school's 

overall developmental guidance program, will provide a variety of 

carpet-related activities progressing in a planned sequence from 

awareness to training. These will be available in addition to other 

school-wide career development activities. It is hoped that students of 

all ability levels will consider the many career opportunities available in 

our primary local industry. (Refer to Carpet Career Development Flow 

Chart for activities.) 



GRADE 9 - AWARENESS : 



GRADE 10- INDIVIDUAL 
ASSESSMENT: 



GRADE 1 1 - CAREER 
EXPLORATION : 



GRADE 12 - CAREER 
TRAINING : 



Students will develop a greater 
awareness of carpet-related careers 
and the carpet manufacturing 
process. 

Students will develop a better 
understanding of their abilities and 
interests as related to a possible 
career in the carpet industry. 

Students will enhance their under- 
standing exposure to carpet careers 
as they relate to school curriculum. 

Students will participate in activities 
which are directly related to their 
career choice and learn skills 
necessary for employment and/or 
further education. 



204 

In addition to student activities, the Dalton Higli School faculty will 
be Involved in several activities designed to enhance awareness of 
carpet-related careers. 

1 . Faculty tours of carpet mills 

2. Teacher/Ennployee exchange 

3. Linkages with industry representatives in each area of the 
curriculum 



205 



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73-118 0-93-9 



206 



DALTON HIGH SCHOOL 

STUDENT/PARENT APPRENTICESHIP PROGRAM 

CONTRACT 



1. The Student/Apprentice can receive 1 1/2 Carnegie units each 
sennester tor the Apprenticeship Program. The )0b will be approved 
by the Apprenticeship Coordinator who will work with the employer 
in developing the Apprenticeship Program. The parent will not 
contact the Apprenticeship Supervisor relative to the 
Student/Apprentice's work without first consulting the 
Apprenticeship Coordinator. 

2. When the Student/Apprentice is absent from school, he/she is not 
permitted to work m the afternoon unless approval is first obtained 
from the Apprenticeship Coordinator. It is the Student/Apprentice's 
responsibility to notify the Apprenticeship Supervisor and 
Apprenticeship Coordinator each day of any absence. 

3. When job situations become unpleasant for the Student/Apprentice 
for any reason, he/she will inform the Apprenticeship Coordinator 
immediately. By conference with the Student/Apprentice and the 
Apprenticeship Supervisor, the Apprenticeship Coordinator will 
determine the appropnate course of action. 

4 If a Student/ Apprentice loses his/her job through negligence or 
misdemeanor, he/she is subject to dismissal from the program and 
may not receive school credit. 

5. The Student/Apprentice must work a minimum of 20 hours a week 
throughout the school year, completing a minimum of 360 hours on- 
the-)ob per semester. 

6. Student/ Apprentices are required to work on a daily basis. If 
exceptions occur, students are required to leave the school grounds at 
the conclusion of their regular school day. They are not to come back 
on campus for any reason without pnor approval from the 
Apprenticeship Coordinator. 



207 



7. Apprenticeship students must maintain a satisfactory relationship 
with the school, teachers, and employers. 

8. Apprenticeship students will maintain a file folder that will include 
current work reports, training plans, and other items directed by the 
Apprenticeship Coordinator. 

9. Apprenticeship students will keep a daily journal listing activities m 
which they participated on the job that day. The journal will be one 
of the sources used m determining the student's grade for the 
program. 

10. Parents and/or guardians will assume full responsibility for the 
conduct and safety of the Apprenticeship student in traveling 
between home, school, and work as well as while engaged in school- 
related projects and activities off campus. If there is a need, Dalton 
High School will provide transportation from school to the job site 
only. Parents or students are held personally liable if transporting 
another student, and the school will assume no responsibility. 

1 1 . Apprenticeship students must maintain passing grades in their school 
based academic classes. 

12. Apprenticeship students may be requirea to stay at school all day if 
an extended-penod bell schedule is in effect for that day. 



Student/ Apprentice Parent/Guardian 



Apprenticeship Coordinator 



208 

DALTON HIGH SCHOOL 

Apprenticeship Program 

Training Agreement 



STUDENT/APPRENTICE'S NAME. 

SOCIAL SECURtTY NUMBER 

MAIUNG ADDRESS 



APPRENTICESHIP COORDINATOR . 
TRAINING STATION 



ADDRESS OF TRAINING STATION. 



APPRENTICESHIP SUPERVISORS NAME. 



APPRENTICESHIP SUPERVISOR'S POSITION. 



STARTING DATE OF STUDENT/APPRENTICE EMPLOYMENT, 

STUDENT/APPRENTICES RATE OF BEGINNING PAY 

OCCUPATIONAL OBJECTIVE 



BIRTH DATE 

TELEPHONE NO.. 
TH.EPH0NENO.. 
TELEPHONE NO.- 



RESPONSIBILITIES 

The Student/Apprentice agrees: 

1 . To be regular in attendance, both In school and on the job. 

2. To inform the Apprenticeship Supervisor promptly if illness or other emergency prevents or delays 
attendance. 

3. To perform training station responsibilities and regular class responsibilities in a satisfactory 
manner. 

4 . To show honesty, punctuality, courtesy, a cooperative attitude, proper health and grooming habits, 
appropriate dress, and a willingness to learn. 

5. To conform to the rules and regulations of the training station. 

6 . To furnish the Apprenticeship Coordinator with necessary information about the training program 
and to promptly complete all necessary reports. 



209 



7. To keep a journal containing daily activities and experiences he/she encounters at the training 
station. The Student/Apprentice will provide the journal to the Apprenticeship Coordinator in a 
timely fashion. 

8. To consult the Apprenticeship Coordinator about any difficulties arising at the training station or 
related to his/her Apprenticeship Plan. 

The parent/guardian of the Student/Apprentice agree: 

1 . To encourage the Student/Apprentice to perform all the job duties and responsibilities effectively. 

2. To share the responsibility for the conduct of the Student/Apprentice while training in the program. 

3. To accept responsibility for the safety and conduct of the Student/Apprentice while traveling to and 
from the school, the work site, and home. 

4. To approve the training station hours and work activities. 

The Apprenticeship Coordinator agrees: 

1 . To work with the Apprenticeship Coordinator in devetoping an Apprenticeship Plan that will Include a 
list of job tasks, skills, and performance Indicators. This Apprenticeship Plan will provkje a basis 
for the student's future full-time employment in his/her chosen field. 

2. To provide a variety of work experiences for the Student/ Apprentice that will contribute to the 
attainment of the Apprenticeship Plan. 

3. To employ the Student/Apprentice for a minimum of 360 hours per semester, (approximately 20 
hours per week) for the entire training period at an appropriate wage. 

4 . To adhere to all Federal and State guklelines concerning safety, chikj labor laws and minimum wage 
regulations. 

5 . To assist in the over-all evaluation of the Student/Apprentice and to serve as primary evaluator for 
on-the-job skill attainment. 

6 . To provide time for consultation with the Apprenticeship Coordinator concerning the 
Student/Apprentice. 

7. To assist in provkling instructional materials and occupational guidance for the Student/Apprentice. 

8 . To adhere to policies and practices which prohibit discrimination on the basis of race, cotor, national 
origin, sex, and handicap in recruitment, hiring, placement, assignment to work task, hours of 
employment, levels of responsibility and pay. 

9. To provide a safe and appropriate work environment for the Student/Apprentk:e. 



210 



The Apprenticeship Coordinator agrees: 

1 . To serve as liason between Dalton High School and the Apprenticeship Supervisor to ensure that all 
Quality Core Curriculum objectives are addressed as required by Georgia State law and that 
Apprenticeship credit is granted. 

2 . To ensure that any necessary classroom instruction related to the job tasks is provided. 

3. To make periodic visits to the training station to observe the Student/ Apprentice, consult with the 
Apprenticeship Supervisor, and render any needed assistance. 

4 . To assist in the evaluation of the Student/Apprentice. 

5 . To keep accurate records pertinent to the Student/Apprentice and to the school. 

6. To regularly inform parents of the Student/Apprentice's progress at the training station. 

7. To assist in providing instructional materials and occupatkinal guidance for the Student/Apprentice. 

Has a Work Permit been obtained by the Student? Gves Gno 



Apprenticeship Supervisor Date Parent/Guardian 



Apprenticeship Coordinator Date Student/Apprentice Date 



211 

APPRENTICESHIP TRAINING PLAN 



STUDENT APPRENTICE: 



APPRENTICESHIP WORK SITE: 
APPRENTICESHIP JOB AREA: . 
JOB SUPERVISOR: 



SCHOOL OBJECTIVES 



Supervisor's Teacher's 
Initials Initials 



A. JOB ENTRY SKILLS DEVELOPMENT 

1 . Identifies and demonstrates use of tool equip- 
ment in trade, industrial and health occupations 

2. Develops and applies mathematical concepts 
and skills required by the job 

3. Develops and applies oral and written 
communication skills as required by business 
and industry 

4. Develops basic and advanced craft skills 
required for entry into trade, industrial, and 
health occupations 

5. Develops skills in the technical and scientific 
aspects of new products, processes and 
techniques 

6. Demonstrates a basic awareness of computer 
operations through applications associated 
with the job 

B. CAREER ORIENTATION SKILLS 

1. Describes the basic characteristics, limitations 
and benefits of the American economic system 

2 Describes the role of the consumer in the 
economic system and awareness of the 
entrepreneur opportunities 

3. Demonstrates consumer considerations and 
responsibilities 

4. Demonstrates the ability to research and plan 
career paths utilizing a variety of technk^ues 
and resources 



212 



Supervisor's Teacher's 
Initials Initials 



C. EMPLOYABILITY SKILLS 

1. Develops communication and organizational 
skills essential to employment acquisition 

2. Demonstrates oral and written communication 
skills essential to employment and retention 

3. Describes personal qualities essential to 
employment retention 

4. Demonstrates abilities essential to personal 
financial management 

5. Lists courtesies that should be extended to 
an employer phor to employment severance 

6. Demonstrates respect for dignity of work 

7. Demonstrates the ability to cope with changes 
in the work environment 

D. LEADERSHIP DEVELOPMENT SKILLS 

1. Demonstrates leadership abilities through 
human relations skills and decision-making 
techniques 

2. Develops pride, self-worth concepts, and 
personal code of ethics 

3. Demonstrates the ability to communicate 
effectively with individuals and groups 

4. Demonstrates the ability to overcome 
personal barriers through self-improvement 

5. Distinguishes between effective and 
ineffective leadership styles 

E. SAFETY SKILL DEVELOPMENT 

1 . Develops knowledge and attitudes toward 
safety in the work place 

2. Determines and demonstrates proficiency 
in the safe and proper use of tools and 
equipment 

3. Develops skills relative to maintaining 
cleanliness, sanitation and good personal 
hygiene 

4. Develops skills in the application of legally 
mandated health and safety practices, including 
the proper use of personal protective clothing 
and equipment in the work place 

5. Develops skills in fire safety, prevention, and 
emergency procedures 



213 



6. Develops skills in the identification of 
electrical hazards 

7. Develops skills in the identification of hazards 
associated with toxic chemicals, fumes, waste, 
and other harmful agents 

8. Develops skills in identification of noise hazards 
and in preventive equipment and techniques 

9. Develops skills in the application of first aid and 
emergency techniques and procedures 



Supervisor's Teacher's 
Initials Initials 



SPECIFIC APPRENTICESHIP JOB TRAINING 
GOAL: The student-apprentice will have a broad understanding of the 
carpet making process and be specifically trained in the area of 



CAREER LADDER 



214 



GBBAN' 
C(X)RDINATOR/rEACHER APPRENTICESHIP PROGR.AM 

OlAirFTrA-nONS: 

I Bachelors degree with Masters degree oreterred. T4 or T5 cemr'icate in appropnate teaching 
field, with prererence to a Vocational area. 

2. Successful student teaching e.xpenence. 

3. Ability to guide and direct the learning process; knowledge ot the subject matter to be taught: 
knowledge ot child growth and development. 

4. Knowledge and/or expenence in the Business/lndustr. Community preterred. 

RFPORTS TO: 

Principal 

fOR GOAL: 

To provide appropnate learning expenences and educauonal opportuniaes for students in the 
.Apprenuceship Program and to serve as a liaison between the Business/ Industry community and 
the school. 

PFRFORVIANT F RF.'^PONSIBILrnES: 

1 Establishes a classroom climate conducive to learning and effective smdy. 

2. .Assists pupils in dealing with academic, personal, social, and vocaaonal problems. 

'^ Works closely with guidance counselor and mstrucuonal team on specific problems of 

individual pupils, and comers with parents, pupils and employers regarding the progress and 
problems ot pupils. 

4. Studies new ideas in his/her special teaching t'leld and keeps abreast of the trends in the 
general field of education. 

5 Works with the pnncipal and fellow teachers cooperatively in matters affecting the school 
system. 

6. Sets an example based on high moral and ethical standards. 

7. Promotes good home, school and employer relations. 

8. Seeks help in problems of instruction and child adjusmient from administrative and 
supervisory staff, bringing the problem to the building pnncipal first. 



215 



9 Maintains records and keeps in contact with students employers. Is responsible tor 
tumishing the employer with an evaluation sheet ot the student and keeps accurate records 
concerning the students work record. Develops appropnate contractual agreements between 
parent, school, students and Business/Industry panner. 

1 0. Coordinates job leads, recnjitment acu viues and placement ot apprenticeship snidents. 
Assures that snidents are piacea in program and on-the-job in accordance with Proeram 
Guidelines and/or students career obiecuve Works wuh Counseling ottice and appropnate 
adnumstrauve stalf concerning student placement in program and number ot students enrolled 
in program. 

1 1. .Maintains toUow-up sur(.eys on students previously enrolled in program tor at least two 
years. 

12. Assists In transition to permanent employment upon graduation. 

1 3. Coordinates the moditication and adaptation ot existing cumculum so as to meet state and 
local system requirements as well ji to meet individual student needs. 

1 4. Prepares a program e\ aluation repon at the end ot each school year and/or at other times as 
needed. 

15. Performs such duties as mav from time to time be assiened. 



216 



ADDITIONS TO THE RECORD 



TESTIMONY OF REPRESENTATIVE RICK BOUCHER 

ADDING MONTGOMERY, ROANOKE AND ROCKBRIDGE COUNTIES, VIRGINIA 

TO THE APPALACHIAN REGION 

BEFORE THE SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 

JUNE 22, 1993 



Mr. Chairman, let me first thank you for holding today's hearing on reauthorization 
of the Appalachian Regional Development Act, and for inviting Congressman Goodlatte and 
me to testify in support of our legislation, H.R. 1451, that would add Montgomery, Roanoke 
and Rockbridge Counties, Virginia, to the Appalachian Region. I represent Montgomery 
County and share representation of Roanoke County with Mr. Goodlatte. 

While these counties are blessed with an abundance of natural resources and creative 
people, their unemployment, poverty and income data have restricted their efforts to address 
social welfare needs and provide economic opportunities for their citizens. Inclusion in the 
Appalachian Region would greatly assist these communities in their goal of equipping their 
citizens with the tools needed to obtain comprehensive, balanced and enduring economic 
development objectives. 

Since the Appalachian Regional Commission (ARC) was formed in 1965, virtually 
every industrial park constructed in my district, every water and sewer system, most of the 
vocational schools and community clinics, and many of the libraries were constructed with 
assistance from the ARC. In the absence of the Commission's valuable contributions, those 
facilities would not have been constructed. 

The growth experienced during the last several decades by those areas of Southwest 
^ Virginia served by the Commission is directly attributable to the assistance provided by the 



217 



ARC. This fact has not gone unnoticed by jurisdictions that are not served by the ARC, but 
are very much in need of the Commission's assistance. That is why we are proposing to 
make Montgomery, Roanoke and Rockbridge Counties eligible for ARC assistance. 

I am pleased that Mr. Randy Wertz, Assistant Deputy County Administrator for 
Montgomery County, Virginia, is here to provide a more detailed accounting of that county's 
specific needs. 

Already a part of the Appalachian Region both geographically and culturally, 
Montgomery, Roanoke and Rockbridge Counties have demonstrated a clear need for the 
development opportunities available through the ARC. I very much hope it will be the 
subcommittee's pleasure to act favorably on our proposal as you reauthorize the Appalachian 
Regional Commission. 




218 



FIFTH PLANNING DISTRICT COMMISSION 



)ULackAveaacS.W. 
pMtomccBM 2M» 
Roaiiok«,Vlrgliila 24010 



fhi (703)34M417 
FwB (7aS)343-4416 



STATENBNT OF 

WAYNB STRICKLAND, EXECUTIVE DIRECTOR 

FIFTH PLANNING DISntlCT DIRECTOR . 

PREPARED BOR THE 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 

COMMITTEE ON PUBLIC MORRS A1B> TRANSPCATATION 

JUNE 22. 1993 



In 1965/ Roanoke County and the Cities of Roanoke and Salem 
were invited to join the Appalachian Regional Connission (ARC)v At 
that time; the regional economic linkages between the Roanoke area 
and southwestern Virginia were not clear nor were they well 
articulated and the result was these communities declined to join 
the ARC. Since the nid-1960's, the complexion of economic 
development in western and southwestern Virginia has changed 
dramatically while the regional linkages have grown clearer. This 
is particularly true in that portion of western Virginia served by 
the Appalachian Regional Commission. 

' The Roanoke Valley is the urban center which serves southwest 
Virginia. The regional airport serves an 80-mile radius extending 
from Wytheville to Covington to Lexington. The medical complexes 
in the Roanoke Valley serve all of southwest Virginia as well as 
parts of southern West Virginia, northwestern North Carolina and 
eastern Tennessee. The electronic and printed media in Roanoke 
serves all of western Virginia. The Roanoke Valley's retail 
service area encompasses 20 counties in southwestern Virginia and 



Allegbany County • Botetourt Couoty • Cntig County • Roanoke County 
atyofClinnnKorge • City of Covington • City of Roanoke • City ot Salem • Town of Vialon 



219 



2 
southern West Virginia. Roanoke is recognized as the shopping and 
cultural center of southwest Virginia. 

Coal from southwestern Virginia's coal fields passes through 
Roanoke on its way to eastern ports, but more importantly, the 
banks, legal services, accounting services and insurance companies 
found in the Roanoke Valley are integral to operations of 
businesses in neighboring ARC communities. In short, that pa*t of 
Virginia currently in the ARC, as well as southern West Virginia 
and Roanoke, are truly economically linked. What happens in 
Roanoke effects those areas and vice versa. However, because the 
comnunities in the Roanoke area are not currently designated as a 
part of the Appalachian Regional Coaunissibn, opportunities are lost 
to further strengthen economic and community development 
activities. 

The regional approach to resolving long-term economic and 
community development problems has been recognized nationally. In 
fact, the ARC is an example of a regional program that can make a 
difference! The federal government, the National Association of 
Counties, the National League of Cities, as well as state 
governments including the Commonwealth of Virginia have all stated 
the need to pursue regional solutions to Issues related to economic 
development. Infrastructure improvements, transportation and the 
environment. 



220 



3 
Since the Roanoke Valley is not a part of the ARC region, and 
therefore cannot participate in programs of the ARC, the ability of 
Roanoke's communities and neighboring ARC communities to pursue 
important cooperative projects is substantially curtailed. If 
jurisdictions within the Roanoke Valley were designated in the ARC 
region, the potential for major tourism-related projects, 
vocational training projects and infrastructure-related projects 
would be greatly enhanced. Joint efforts to strengthen^ this 
region's competitiveness in attracting new business could be 
enhanced significantly if all communities in the region had access 
to various ARC programs and could jointly apply for projects. 

Just as urban centers such as Asheville, North Carolina and 
Huntsville, Alabama have utilized ARC programs to strengthen 
regional economic development, the same thing could occur in the 
greater Roanoke region. 

Currently, five of the nine member governments in the Fifth 
Planning District of Virginia are situated in the ARC region (the 
Fifth Planning District Commission is the regional planning agency 
which serves the Roanoke Valley and Alleghany Highlands) . Some 
cooperative efforts between the Roanoke Valley and neighboring ARC 
communities have been pursued, but because the Roanoke Valley is 
not a part of the ARC, limitations toward even greater cooperative 
ventures exist. For example, a few years ago Botetourt County (an 
ARC community), which is in the ARC region, was attempting Lo 



221 



4 

develop an industrial park in conjunction with Roanoke County (a 
non-ARC community). Since ARC is limited to participating in only 
those jurisdictions designated by ARC, ARC support for this 
cooperative project was not pursued. Joint economic development 
activities could be expanded if the communities within the Roanoke 
Valley were also part of the ARC region. It is clear that citizens 
of the Roanoke Valley, as well as surrounding ARC communities, 
would benefit from the expansion of the ARC boundary in^ this 
region. 

Another example of the benefit of expanding the ARC boundary 
to include the Roanoke Valley is in the area of tourism 
development. The new buzz word in the field of tourism is "eco- 
tourism". That is, many people, as they look for vacation 
opportunities, are choosing to go back to the environment. Whether 
that's hiking in the mountains, horseback trails or white-water 
rafting down the New River, what all the experts tell us is that 
eco-tourlsra will be the growth area in the travel .industry in the 
future. The opportunities to promote the mountains of Virginia 
between the Roanoke area and its surrounding ARC communities and 
the vast national forests that are within their boundaries is 
tremendous. Without the strength of draw that Roanoke provides, 
both in terms of transportation and hotels, restaurants, other 
support services, as well as a variety of experiences a traveler 
would get in an urban area like Roanoke, the potential of joint 



222 



5 
marketing efforts for the ARC conponent is reduced significantly 
and weakens the region-wide effort. 

In conclusion, the Appalachian Regional Commission, since its 
inception, has been a partnership between federal, state and local 
governments. By designating the Roanoke Valley as a part of the 
Appalachian Regional Commission, Congress will be enhancing this 
partnership within western and southwestern Virginia. - The 
expansion of the ARC boundaries to include the communities of 
Roanoke County and the Cities of Roanoke and Salem would help to 
strengthen existing economic linkages, expand economic benefits and 
promote a higher quality of life for citizens of the entire region. 



TO EXAMINE EXISTING PROGRAMS UNDER 
THE PUBLIC WORKS AND ECONOMIC DE- 
VELOPMENT ACT OF 1965 AND THE APPA- 
LACHIAN REGIONAL DEVELOPMENT ACT OF 
1965 AND TO CONSIDER PROPOSALS TO RE- 
AUTHORIZE THE PROGRAMS AS WELL AS 
NEW INITIATIVES TO PROMOTE GROWTH 
AND DEVELOPMENT 



THURSDAY, JUNE 24, 1993 

House of Representatives, 
Subcommittee on Economic Development, 
Committee on Public Works and Transportation, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:40 a.m., in Room 
2167, Raybum House Office Building, Hon. Robert E. Wise, Jr. 
(chairman of the subcommittee) presiding. 

Mr. Wise. This hearing of the Subcommittee on Economic Devel- 
opment for the Public Works and Transportation Committee will 
come to order. 

This is the third in a series of hearings on the Economic Develop- 
ment Administration and the Appalachian Regional Commission. 
And we are very, very appreciative of the witnesses, some of whom 
have traveled long distances to be here. 

On the first day of hearings, we focused on the Economic Devel- 
opment Administration, the EDA. Yesterday, was the ARC. And we 
are back again to the EDA. I am delighted to be the Chair of this 
subcommittee at this time, since I believe that this administration 
intends to move forward on an EDA authorization, and it is our 
goal to work with them. 

As you know, funding for the EDA was included in the adminis- 
tration's budget request $30.1 million for salary and expenses and 
$223 milhon for program assistance, including $33 million for de- 
fense, economic adjustment. 

EDA officials have testified before the appropriations subcommit- 
tee and I believe the fiill appropriations committee meets today to 
mark up the full Commerce, Justice, State and Judiciary bill with 
funding for those programs. 

Second, the administration sent up a draft bill calling for a one 
year authorization and a few technical amendments, which I intro- 
duced by request with my colleagues. Representatives Mineta, Shu- 
ster, and Molinari. 

(223) 



224 

The bill, H.R. 2442 has been referred exclusivly to our commit- 
tee. As I mentioned in our initial hearing, my hope is to develop 
a longer Ufe bill with amendments to address some of the criticisms 
that nave been brought to the committee's attention. I anticipate 
working closely with the administration, and I had a chance to run 
into Commerce Secretary Ron Brown this week and brought up 
this matter with him. It is our hope to coordinate our efforts with 
the administration. 

Today, I will insert my full statement in the record, but we are 
pEirticularly interested in hearing from economic development ex- 
perts with their experience with any existing EDA programs, what 
new initiatives and ideas we might try and what legislative and 
other suggestions they can recommend that will help promote de- 
velopment and lead to development of jobs in the distressed areas 
of the Nation. 

Let me say to those on the panel, thank you very much for being 
here. You are getting probably the last chance to officially address 
liie subcommittee before the subcommittee begins working on the 
legislation. It is not anticipated to hold another hearing, all things 
of course in this body, particularly this year, are subject to change. 
But, at this point it would be the Chair's intention to work closely 
with all Members and to try and begin actually drafting an EDA 
authorization following this hearing and over the next month or so. 

Thank you again for being here and I turn to the Ranking Mem- 
ber, Ms. Molinari. 

[Mr. Wise's prepared statement follows:] 




225 



m.B. House of fieiiresentattueB 

COMMITTEE ON PUBLIC WORKS 
AND TRANSPORTATION 

SUITE 2 IBS RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON. OC 20516 

(202) 225-4472 



REMARKS OF 

THE HONORABLE ROBERT E. WISE. JR. 

CHAIRMAN. SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 

CONTINUATION OF HEARINGS ON REAUTHORIZATION OF 

THE PUBLIC WORKS AND ECONOMIC DEVELOPMENT ACT 

AND 

THE APPALACHIAN REGIONAL DEVELOPMENT ACT 

JUNE 24. 1993 



GOOD MORNING. THE SUBCOMMITTEE ON ECONOMIC 
DEVELOPMENT WILL PLEASE COME TO ORDER. THIS MORNING THE 
SUBCOMMITTEE IS CONTINUING ITS HEARINGS TO REVIEW AND 
REAUTHORIZE THE PROGRAMS .\DMINISTERED BY THE ECONOMIC 
DEVELOPMENT ADMINISTRATION (EDA) AND THE APPALACHIAN 
REGIONAL COMMISSION (ARC). 

ON OUR FIRST DAY OF HEARINGS WE FOCUSSED ON THE ECONOMIC 
DEVELOPMENT ADMINISTRATION. ON OUR SECOND DAY - THIS PAST 
TUESDAY - WE FOCUSSED ON THE APPALACHIAN REGIONAL COMMISSION. 
TODAY WE ARE AGAIN TURNING OUR ATTENTION TO THE EDA AND I 
WANT TO WELCOME OUR WITNESSES AND EXTEND OUR APPRECIATION 
FOR YOUR TAKING THE TIME TO COME AND TESTIFY. 

AFTER 12 YEARS OF A STEADFAST CONGRESS HOLDING FIRM 
AGAINST EFFORTS TO TERMINATE EDA. IT IS MY GREAT PLEASURE TO BE 
CHAIRMAN OF THE SUBCOMMITEE ON ECONOMIC DEVELOPMENT AT A 
TIME WHEN A NEW ADMINISTRATION HAS RECOGNIZED NOT ONLY THE 
VALUE OF THE PROGRAMS BUT THE CONTINUING NEED FOR THEM. 

IN RECENT WEEKS WE HAVE BEEN SEEING POSITIVE ACTION 
RELATED TO EDA. FIRST, AS YOU KNOW. FUNDING FOR EDA WAS 
INCLUDED IN THE ADMINISTRATION'S BUIDGET REQUEST - $30,151 MILLION 
FOR SALARIES AND EXPENSES AND $223,150 MILLION FOR PROGRAM 
ASSISTANCE. INCLUDING $33 MILLION FOR DEFENSE ECONOMIC 
ADJUSTMENT - AND. EDA OFFICIALS TESTIFIED BEFORE THE 
APPROPRIATIONS SUBCOMMITTEE. TODAY THE FULL APPROPRIATIONS 
COMMITTEE IS MEETING TO MARK UP THE COMMERCE, JUSTICE. STATE 
AND JUDICIARY APPROPRIATIONS BILL THAT INCLUDES FUNDS FOR 
THESE PROGRAMS. 



226 



SECOND, THE ADMINISTRATION SENT UP A DRAFT BILL CALLING 
FOR A ONE- YEAR AUTHORIZATION AND A FEW TECHNICAL AMENDMENTS. 
WHICH I INTRODUCED BY REQUEST WITH MY COLLEAGUES 
REPRESENTATIVES MINETA. SHUSTER AND MOLINARI. THE BILL. H.R. 2442. 
HAS BEEN REFERRED EXCLUSIVELY TO OUR COMMITTEE. AS I 
MENTIONED AT OUR INITIAL HEARING. MY HOPE IS TO DEVELOP A 
TWO-YEAR BILL WITH AMENDMENTS TO ADDRESS SOME OF THE 
CRITICISMS AND DIFFICULTIES WITH THE PROGRAMS THAT HAVE BEEN 
BROUGHT TO THE COMMITTEES ATTENTION. I ANTICIPATE WORKING 
CLOSELY WITH THE ADMINISTRATION SO THAT WE MAY COORDINATE 
OUR LEGISLATIVE EFFORTS. 

AT THIS POINT IN TIME. I IX)NT BELIEVE THERE IS ANY REAL 
QUESTION THAT SINCE THEIR INCEPTION EDA"S PROGRAMS HAVE HAD A 
POSITIVE IMPACT IN HELPING SEVERELY DISTRESSED COMMUNITIES AND 
REGIONS. THE SUBCOMMITTEES HEARING RECORD OVER THE YEARS - 
AND AGAIN IN TESTIMONY PROVIDED ON OUR FIRST DAY - SPEAKS TO 
THE EFFECTIVENESS OF EDA ASSISTANCE IN PROMOTING ECONOMIC 
RENEWAL AND GROWTH AND THE FACT THAT. BECAUSE OF EDA HELP. 
MANY JOB-CREATING PROJECTS WERE ABLE TO GO FORWARD. 

HOWEVER, THE WORLD HAS CHANGED. THE COLD WAR HAS ENDED 
AND THERE HAVE BEEN EXTRAORDINARY ECONOMIC AND POLITICAL 
CHANGES NATIONALLY AND INTERNATIONALLY OVER THE YEARS. OUR 
NATION FACES MANY DIFFERENT CHALLENGES AS WE STRIVE TO BE 
ECONOMICALLY STRONG AND GLOBALLY COMPETITIVE - NOT THE LEAST 
OF WHICH IS CONVERTING FROM MILITARY TO CIVILIAN-RELATED 
RESOURCES. NOW WE MUST DETERMINE THE BEST WAY TO PROVIDE 
FEDERAL ASSISTANCE THAT WILL SUPPORT THE EFFORTS OF LOCAL 
COMMUNITIES TO DIVERSIFY AND STRENGTHEN THEIR ECONOMIES. FOR 
THAT IS WHAT WILL KEEP OUR NATION GREAT. 

SO. WE ARE ESPECIALLY INTERESTED IN HEARING FROM ECONOMIC 
DEVELOPMENT EXPERTS ABOUT THEIR EXPERIENCE WITH EXISTING EDA 
PROGRAMS AND WHAT HAS BEEN PARTICULARLY HELPFUL. AS WELL AS 
WHAT NEW INITIATIVES AND IDEAS WE MIGHT TRY AND WHAT 
LEGISLATIVE AND OTHER SUGGESTIONS THEY CAN RECOMMEND THAT 
WILL HELP PROMOTE DEVELOPMENT AND LEAD TO THE CREATION OF 
JOBS IN DISTRESSED AREAS OF THE NATION. 

TODAY WE LOOK FORWARD TO LEARNING MORE ABOUT THE EDA 
PROGRAMS FROM THOSE WHO WORK CLOSELY WITH THEM. 



227 

Ms. MOLINARI. Thank you, Mr. Chairman. 

I want to join you in welcoming our witnesses and I look forward 
to hearing from these people who work directly with the EDA. 

I have to take a moment out to welcome particularly Rabbi Mor- 
ris Shmidman of Boro Park, Brooklyn. The work of the Business 
Outreach Center, he will tell us, has helped many small businesses 
throughout our district. I am glad that the Rabbi is able to join us 
and share the success of the program. I am glad he brought Paul 
Chemick with him. 

Thank you for holding these hearings, Mr. Chairman. And I 
think with the help of the witnesses that have come before us, that 
the EDA will continue to be as valuable in the future as it has been 
in the past, if not more so. 

Thank you. 

Mr. Wise. I thank the gentlewoman and turn to the gentleman 
from California, Mr. Hamburg. 

Mr. Hamburg. No opening statement, but I, too, thank you for 
holding these hearings, and I am appreciative of the vision that 
this administration is showing in bringing EDA back to the fore as 
an agent for economic development. I know my district very much 
benefits from the work of EDA and I hope to, as a member of this 
committee, to work to strengthen this agency and work with the 
administration to do so. 

Thank you. 

Mr. Wise. Thank the gentleman and turn to the gentleman fi-om 
Pennsylvania, Mr. dinger. 

Do you have any opening remarks? Thank you. 

At this point, now that we have made all of our opening state- 
ments, I am going to recess the hearing for the purpose of a vote 
and the subcommittee will resume as soon as possible, which hope- 
fully will be no more than 15 minutes. Thank you. 

[Brief Recess.] 

Mr. Wise. The subcommittee will resume its hearing and I thank 
the patience of the witnesses. The Energy and Water appropriation 
bill is on the floor. It is under a five-minute rule, which means that 
amendments can be voted on at any time so we will try to move 
as expeditiously as possible. 

In our first panel of witnesses, I am delighted to see two old 
fi*iends from West Virginia as well as others who have been so ac- 
tive in behalf of economic development. Our first panel will feature 
Kenneth Green, Executive Director of Eastern Panhandle Regional 
Planning and Development Council for Martinsburg, West Virginia. 
He is speaking on behalf of the National Association of Regional 
Councils. 

Also on the panel is Thomas McClure, Director of the Economic 
Development Administration University Center, Western Carolina 
University, in CuUowhee, North Carolina, speaks as President of 
the National Association of Management and Technical Assistance 
Centers, and he is accompanied by an old friend, Stafford Thorn- 
ton, Technical Assistance Center, West Virginia Institute of Tech- 
nology in Montgomery, West Virginia; and our final witness, Robert 
Paciocco, Executive Director of the Mid-East Commission fi-om 
Washington, North Carolina, and he is speaking on behalf of the 
National Association of Development Organizations. 



228 

Gentleman, we welcome all of you. Your written statements will 
made a part of the record and we invite you to proceed in any way 
that you wish. And we will start with Mr. Green. 

TESTIMONY OF KENNETH GREEN, EXECUTIVE DIRECTOR, 
EASTERN PANHANDLE REGIONAL PLANNING AND DEVELOP- 
MENT COUNCIL, MARTINSBURG, WV, SPEAKING ON BEHALF 
OF THE NATIONAL ASSOCIATION OF REGIONAL COUNCILS 
(NARC); THOMAS E. McCLURE, DIRECTOR, ECONOMIC DE- 
VELOPMENT ADMINISTRATION UNIVERSITY CENTER, WEST- 
ERN CAROLINA UNIVERSITY, CULLOWHEE, NC, AND PRESI- 
DENT-ELECT, NATIONAL ASSOCIATION OF MANAGEMENT 
TECHNICAL ASSISTANCE CENTERS (NAMTAC), ACCOM- 
PANIED BY STAFFORD THORNTON, TECHNICAL ASSISTANCE 
CENTER, WEST VIRGINIA INSTITUTE OF TECHNOLOGY, 
MONTGOMERY, WV; ROBERT PACIOCCO, EXECUTIVE DIREC- 
TOR, MID-EAST COMMISSION, WASHINGTON, NC, AND PRESI- 
DENT NATIONAL ASSOCIATION OF DEVELOPMENT ORGANI- 
ZATIONS (NADO) 

Mr. Green. Grood morning, Mr. Chairman, and members of the 
subcommittee and panel. 

I would like to begin by stipulating on some preamble that you 
wanted us to discuss from a developer-practitioner standpoint. 
Having had the opportunity previously to discuss that in detail, I 
am sure that I already have volumes on record. And I would like 
to address some side and important issues regarding EDA this 
morning. 

We appreciate the opportunity to present some of our thoughts 
on the reauthorization of the Economic Development Administra- 
tion and the Appalachian Regional Commission. 

As was previously stated, my name is Dr. Kenneth Green, Execu- 
tive Director of West Virginia's Eastern Panhandle Regional Plan- 
ning and Development Council and President of the executive di- 
rector's committee of the statewide West Virginia Association of Re- 
gional Planning and Development Councils. My council and the 
other 10 councils in the State operate as economic development dis- 
tricts under the economic auspices of the EDA programs and as 
local development districts under the auspices of the ARC legisla- 
tion. 

I am here today as a representative of the National Association 
of Regional Councils, an organization that services regional coun- 
cils throughout the United States. 

The brief expressions of support that I am making this morning 
are founded on my career involvement and academic understanding 
of the necessary conditions for successful and meaningful grass root 
economic and community development efforts — citizens that are 
given a little bit of resources to become more resourceful and to be- 
come active players in their own destinies for well-being. 

I started out this career in Congressman "Bizz" Johnson's district 
back in California. And I am sure that all of you recognize his pic- 
ture in the back of the room. And aside from that, I think that he 
is generally recognized as the father of the public works legislation, 
1965, and the creation of EDA and many of the programs that were 
initiated under the Economic Development Administration. 



229 

The beliefs that I hold today regarding EDA are those which he 
conveyed to me as relayed by the intentions of the Congress at that 
time on this particular issue. 

Since those days, I went on to earn a master's degree and Ph.D. 
in rural sociology and community development, and even with such 
tapestry, I cannot find fault with the original intentions regarding 
the public works act. 

Within the next two weeks, the National Association of Regional 
Councils will have completed a survey of several economic develop- 
ment districts located in EDA regions regarding their use of EDA 
funding with descriptions of activities that have been accomplished 
at the district level. That survey will be presented to members of 
the appropriate Senate subcommittee and other Members of Con- 
gress. We anticipate and fully expect the results of this survey to 
show that despite the lack of support during the past 12 years of 
inadequate funding, EDA programs have been beneficial to our 
rural regions. 

We are aware that the administration is seeking a one-year reau- 
thorization of the EDA and ARC. For several reasons, the National 
Association of Regional Councils would like to see a two-year reau- 
thorization of programs at this time. 

First, a two-year reauthorization would allow the Economic De- 
velopment Administration to develop a mission statement for the 
agency that is relevant to the administration's programs to revital- 
ize the Nation's economy. 

Currently, no one has been appointed to head the agency, which 
hampers the development of any such roles. It could be several 
months before there is an appointee. A two-year reauthorization 
would not put pressure on the Economic Development Administra- 
tion regarcfing a well thought out proposal on the reorientation of 
the EDA programs to meet the priorities of the Clinton administra- 
tion. 

Second, next year is an election year, adding to Congress' activi- 
ties and work load and make it difficult to address the long-term 
future of the Economic Development Administration. 

Third, the Economic Development Administration needs time to 
realize that it is no longer an agency under orders by the adminis- 
tration to dismantle itself. It needs to readjust and reassess its po- 
sition in the order of national economic development processes. 

The Clinton administration has recognized the need for long- 
term planning, not only at the national and State levels but the re- 
gional level as well. It is only through planning that our local com- 
munities can develop a strategy for growth, can cooperate with 
each other in finding the best solutions to their economic and com- 
munity problems. 

These plans have served as a road map for rural communities as 
they struggle not just to survive but to provide for their economic 
fiiture, especially in the generation of decent pa3ring jobs for local 
residents. 

But EDA planning fiinds have remained static for several years, 
the amount of money going back to economic development districts 
for planning has not kept pace with inflation and growing demands 
in the region for economic expertise. Lack of planning funds has 
not allowed us to develop new programs. The current $55,000 in 



230 

planning funds barely covers the cost of keeping an economic devel- 
opment expert on staff and developing overall economic develop- 
ment plans, let alone for providing technical assistance to local gov- 
ernments or to become involved in new economic development pro- 
grams and to assist our local businesses with marketing strategies. 

Lack of adequate ftinds means that EDA has been unable to pro- 
vide ftmds to 34 regions that have met all the requirements and 
have already been designated as economic development districts. 
The Economic Development Administration and the Appalachian 
Regional Commission are the only agencies in the Federal Govern- 
ment that understand, appreciate, and have the expertise to de- 
velop realistic strategies to bring economic revitalization to our Na- 
tion's most economically stressed regions. It is only logical that 
EDA be given a lead role in working on other Federal agencies to 
develop a strategic role for working with other Federal agencies to 
develop a strategic approach to problems that have plagued our 
rural areas for a number of years, including the integration of the 
newly proposed empowerment zones and enterprise communities. 

I want to thank you for the opportunity to appear here today. If 
the National Association of Regional Councils, here in Washington, 
and we at the regional councUs that service local designated eco- 
nomic development districts can be of any help, let us know. We 
stand ready to support a new and expanded role for the Economic 
Development Administration and continued outstanding work for 
the Appalachian Regional Commission. 

Mr. Wise. I appreciate your remarks, Mr. Green. They are very 
helpful and I note with interest that it would probably be helpful 
if we had an administrator for the agency at this time. 

Mr. Green. I think we have concurrence on that. 

Mr. Wise. The next witness is Thomas McClure, the Director for 
the Economic Development Administration University Center, 
Western Carolina University in Cullowhee, North Carolina, and he 
is accompanied by Stafford Thornton with the Technical Assistance 
Center, West Virginia Institute of Technology, Montgomery, West 
Virginia. 

Mr. McClure. Thank you, Mr. Chairman, and members of the 
subcommittee. 

My name is Tom McClure. For the past eight years, my day job 
has been director of the EDA University Center at Western Caro- 
lina University, where we serve the 28 westernmost counties in 
North Carolina. But I am also here to speak for the National Asso- 
ciation of Management and Technical Assistance Centers, 
NAMTAC. NAMTAC is an umbrella organization composed of uni- 
versity and college affiliated centers. 

Our mission is to assist in the transfer of academic-based infor- 
mation, research and technology to communities £uid businesses in 
furtherance of economic development and industrial competitive- 
ness. Our member institutions provide assistance with manage- 
ment, technology and economic development programs. The EDA 
University Center Program is funded under the Economic Develop- 
ment Administration with matching funds siipplied by State and 
local and private resources. EDA University Centers provide high 
value economic development and technology transfer services to 
urban and rural communities and businesses. The EDA University 



231 

Center Program is unique because it stands as the primary bridge 
between business and the critical technologies, research and exper- 
tise of American colleges and universities. 

There is no "typical" or prototype EDA University Center. Each 
Center carves out its own niche to address the needs of the commu- 
nities and businesses it serves, although, centers do have com- 
monalities. We provide direct one-on-one advice and counsel to our 
clients. Second, we help communities build the humgin capital and 
physical infrastructure or capacity to support and encourage eco- 
nomic development. Third, we serve as a catalyst to leverage brain 
power and financial resources to increase the economic wealth and 
overall welfare of the region through the creation and enhancement 
of jobs. 

In 1984, the majority of EDA University Center programs were 
funded at $80,000 each. In 1992, Congress directed EDA to fund 
the centers at $130,000. And regrettably EDA chose instead to fund 
most centers at $104,000. And between 1984 and 1992, Centers 
were funded at levels ranging from $40,000 to $100,000, clearly not 
enough to do a credible job. 

The Centers have faced a shortfall because of the cost of living 
over this time period. We could do a better job of program planning 
if we had a predictable base level of funding year to year. Further, 
we could effect greater positive changes for businesses and commu- 
nities with additional funding to leverage each center's scarce re- 
sources. 

Each center's geographic and demographic service area is vast 
and each center's demand for service has never been greater. We 
serve approximately a third of the State of North Carolina, which 
has mountainous terrain and whose geography makes it difficult to 
deliver a program to such a large service area. 

So we, the EDA Centers, the Economic Development Administra- 
tion, and Congress, need to seriously address these concerns. 
Therefore, we have set out our funding request for the upcoming 
fiscal year and the following five years to be included in the reau- 
thorization of the Economic Development Act. Our authorization 
request also covers elements that we believe will improve the pro- 
gram. 

To restore diminished funding and to meet client demand, begin- 
ning in fiscal year 1994, a $150,000 funding level for each of the 
64 existing centers is being requested from the appropriation com- 
mittees. We have also requested an additional $500,000 to institute 
a peer review-based quality evaluation program. Our total budget 
request for fiscal year 1994 is $10,895 million. 

The University Center directors recognize peer review as a criti- 
cal need to serve to strengthen EDA centers. We are committed to 
implementing such a plan. We foresee establishing peer review 
teams similar to those which are used by the small business devel- 
opment center program. These teams will be composed of an EDA 
representative and two center directors from other regions of the 
country to conduct site visits at operating EDA Centers. 

The 64 University Centers in place today are doing vitally impor- 
tant work with an extremely low budget. However, six States do 
not have an EDA Center. It is critically important for legislation 
that reauthorizes EDA to include language to provide for additional 



232 

Centers so that every State can have at least one Center with larg- 
er States having two or three. We hope that Congress and the Eco- 
nomic Development Administration will develop a five-year plan 
calling for the addition of four new Centers during each of the next 
five years. 

The University Center program is one that deserves to be sup- 
ported at least at the levels proposed in the budget item. Just as 
importantly, the Center directors need to know what to expect in 
Federal support that they can count on year to year. The Centers 
use the base level funding to leverage state, local, and private dol- 
lars, however when the federal dollars go down, the local dollars 
go down and the program diminishes. 

Assuming that the fiscal year 1994 budget will provide $150,000 
per center, we suggest that this level be increased by 50,000 for 
each Center in each of the next three fiscal years and then held 
at $300,000 in each of the final two years of the five-year reauthor- 
ization period. In my testimony there is a chart which shows how 
this funding was spread out, including the peer review process over 
that period of time. 

Our request really represents a small investment of Federal 
fiinds for a program that exhibits a very strong positive impact on 
America's businesses and communities. The investment will be en- 
hanced by our ability to leverage several times that amount in local 
program dollars. 

Now, I would like to highlight just a few of some of our Centers' 
accomplishments with you. EDA Centers nationwide have specific 
technical, logical and economic development assistance delivery 
systems in place which can serve as a key component for fiiture in- 
dustrial expansion efforts. The wealth of experience over this time 
frame has permitted Centers to make numerous positive contribu-. 
tions to businesses and to communities. 

We maintain close and regular contact with our constituencies in 
order to ascertain and meet their changing needs. We have created 
industry networks and assisted in providing vital economic and de- 
mographic information, developed capital pools for business forma- 
tion, and helped to implement industry cooperatives and initiated 
numerous other projects. EDA University Centers' unique role of 
linking higher education, businesses and communities provides a 
foundation upon which University Centers can play a crucial role 
in enhancing industrial efforts. 

Some examples of work that our centers have done; for example 
in Michigan, General Motors announced plans to close plants in six 
communities by 1995, impacting 18,200 jobs. The University of 
Michigan EDA Center is coordinating activities to help commu- 
nities begin to recover from these sudden and severe economic dis- 
locations. Michigan will also be impacted by the imminent closing 
of the Wurtsmith Air Force Base. That base has been responsible 
for a $145 million economic impact. The University of Michigan 
EDA Center is working with community and political leadership to 
devise a plan to convert base housing into retirement housing ca- 
tering to military, government and corporate retirees. 

PENNTAP continues to work with chents to transfer technology. 
A case in point is a president of a small company who was working 
for another company and developed a technologically advanced 



233 

process for the improvement of cutting tools. He needed help, and 
the EDA Center was able to bring the resources together so that 
in a few short months this client had entered the Pittsburgh mar- 
ket, created three new jobs, served 43 customers, and achieved 
sales of over $10,000 a month. 

The EDA Center in Eastern Kentucky University fostered the de- 
velopment of a secondary wood manufacturers' network that re- 
sulted in over 100 new jobs for eastern Kentucky. 

The Washington State University Center works with the Confed- 
erated Tribes of the Colville Reservation by providing management 
and technical advice in all aspects of tribal business. 

Arkansas State University Center serves an economically de- 
pressed area of the Mississippi delta. This Center completed a re- 
gional leadership program serving 149 people from 35 towns and 
14 counties. The program has been described as demonstrating a 
method for developing new kinds of leaders for rural America. 

At Western Carolina University, we just completed a regional 
leadership program that graduated 38 leaders. Our graduates are 
encouraged to take on a tangible project. At this point, the grad- 
uates are engaged in a campaign to improve work force prepared- 
ness of the region through improving the education and training 
delivery system. 

At Western Carolina, we are active in establishing the Mountain 
Commercial Lending Consortium for businesses that could not ob- 
tain traditional bank financing. 

Let me say that America's taxpayer today realizes more than 
ever the importance of the Federal Government not to duplicate ef- 
forts or to spend money unwisely. But because of the University 
Centers' strong positive impact on jobs within their jurisdiction, it 
makes economic sense to support an expanded EDA University 
Center Program. The centers already have the people in place and 
are operating effectively. The valuable resources of their univer- 
sities are linked and leveraged and the connections to the business 
communities and key government agencies are established Eind 
working. Therefore, the EDA University Center Program augments 
existing activities, whereas new programs must struggle to get up 
to speed before service can be provided. 

Mr. Chairman, I thank you very much for the opportunity to ap- 
pear and I will be happy to answer any questions. 

Mr. Wise. Thank you very much, Mr. McClure. 

Mr. Thornton, did you have anything you wished to add? 

Mr. Thornton. Thank you, Mr. Chairman. I am here to simply 
reinforce what Mr. McClure has said about all EDA university cen- 
ters £ind give you some idea of one center and what we have been 
able to do in three years. We are in our third year at West Virginia 
Tech. 

Our particular mission is to work with nonprofit organizations 
and government organizations within the State. Our district that 
we work with is the entire State. We work with economic develop- 
ment authorities, industrial development authorities, tourism coun- 
cils, chambers of commerce, and economic planning and regional 
councils. 

We have done all sorts of start-up proposals and most of our pro- 
posals are done by faculty either at our institution or using faculty 



234 

from other institutions that are more closely associated where 
these projects are going. And the times we do not have the exper- 
tise within the higher education system, we hire outside consult- 
ants. 

A partial list of some things around the State that we have been 
able to do is labor studies for the Greensboro Valley, high-tech 
work at Beckley, a museum study and feasibility plan for Charles- 
ton, a renovation plan for West Washington Street, industrial site 
study for Clendenin. 

The real beauty of our program is the ability to adapt to local 
situations and to give almost immediate response to the needs of 
people. Most of my projects are less than 60 days from inception 
to mnding. We can give seed money to get large projects started. 
We can do feasibility studies so that people may follow up and have 
reason to continue or to discontinue their efforts on larger projects 
depending on what we can find out. 

The biggest problem is turning away good projects. I face the 
problem of going back to Montgomery on Monday and deciding 
which one of four very good projects that we have got to fund and 
we only have money left for one in this fiscal year. 

Thank you, Mr. Chairman. Any questions, I will be glad to try 
to answer. 

Mr. Wise. Thank you very much. 

Our final witness on this panel is Robert Paciocco, the Executive 
Director of the Mid-East Commission from Washington, North 
Carolina, and speaking on behalf as President of the National As- 
sociation of Development Organizations. 

Mr. Paciocco. Thank you. I appreciate this opportunity to testify 
this morning. 

I would be negligent if I did not first extend to you my com- 
mendations for the extreme interest you have in our program; your 
program as well. But at the rural level, sometimes we feel like we 
are being left out up here. And we take very seriously and appre- 
ciate very much what you are doing for us back home. Thank you. 

I represent two agencies, my own agency 

Mr. Wise. If I could just intervene for a second. To point out that 
Ms. Molinari keeps me very straight on this subject; rural versus 
urban allocation of assets. TTiank you. 

Mr. Paciocco. And I have already mentioned to her that I appre- 
ciate her work on base closings, being a former Navy chaplain, and 
how much I appreciate her concern on that. 

I represent the Mid-East Commission. This is the regional orga- 
nization that was established 26 years ago by the local governing 
bodies in our five-county area with a population of just over 
200,000 people, so we are quite small. 

Within those five counties, we have 40 municipalities, all of them 
very rural. Twenty-seven of our counties Eind towns do not even 
have a manager. And of that, 16 have only a part-time town clerk. 
And yet, they must keep up with all the regulations of the largest 
cities. 

Twenty-five of our 40 towns have fewer than a thousand popu- 
lation. So what do we do for them? As a regional council, not only 
Mid-East Commission, but those around the country, perform a 
wide range of the technical assistance, grant writing, grant admin- 



235 

istration, the drafting of ordinances, studies, planning even to the 
point of helping them with their budgets and answering a mul- 
titude of questions about how do you run a town and how do you 
get through a public hearing and how do you determine your 
boundaries and these kinds of things. 

We provide a great deal of small business gap financing. In many 
of our areas, we are the only ones providing this gap financing. In 
our situation, we have five different loan programs through EDA, 
SBA, our North Carolina Rural Development Center, and through 
the Durham Self-Help Center. So we do provide a real needed serv- 
ice for our citizens. 

We assist in long-term strategic economic development plans, 
and then as a regional council we operate many other programs 
that dovetail in the work of our economic development very nicely. 
Things like the ages programs, the manpower and JTPA programs 
which work with the work force; community development, the 
CDBG program, criminal justice and our narcotics task forces that 
we administer, our senior employment program and our planning 
development, all of these issues seek to encourage and strengthen 
our economic development work. 

Are we needed and used by our local governments? In the nine 
years I have had the privilege of serving the Mid-East Commission, 
we have expanded from 11 to 40 employees. We have expanded 
from operating 21 grants and contracts to 95. And we have seen 
our budget increase from $1 million to $6 million locally. 

I give you this information certainly not to brag, but to impress 
on this committee the importance of regional organizations that are 
created and controlled completely by local government and the 
work these organizations are doing to help all of our citizens. And 
for those who watch the Statler Brothers, now Harold, he closes 
every week with: We ain't even started yet. 

The feature of regionalism is beginning to experience a revival 
the likes of which I have not seen in my 20 year professional career 
working with regions in this State and Virginia. And why? Well, 
our 77 million rural Americans as compared to our urban cousins, 
are far poorer, with a less per capita income with a much higher 
unemployment rate, with more high school dropouts, with fewer 
high school graduates, with less capacity for a supportive tax base, 
and less opportunity for local leadership, and with greater bound- 
ary, geographic boundaries that we have to deal with in all of our 
issues. 

So this morning I am here to do two things. First, I would cer- 
tainly want to express my gratitude to Congress and to the admin- 
istration for including EDA and ARC in budget requests for the 
submission of reauthorization legislation for consideration. We also 
urge such reauthorization legislation for a minimum of two years. 
And we applaud your effort, Mr. Chairman, at this particular point. 

With continued congressional backing, the administration's sup- 
port and adequate funding, EDA and ARC can become even more 
effective partnering in economic and community development ef- 
forts in rural America and in our small cities. 

Secondly, I wish to request your support in four basic areas of 
economic development. First, public works grants. We desperately 
need more assistance with infi-astructure needs. Our local folks just 



236 

have no way of taxing their citizens enough to pay for this needed 
work. In a recent survey conducted by NADO, NADO and 
NAMTAC, across the country the top priority was infrastructure, 
followed secondly by solid waste concerns. EDA has an excellent 
program, Title I, but they need more funding. 

We request a minimum of $100 million be added to the public 
works projects and we believe we can show that this money is very 
well spent. For your information, in fiscal year 1992, EDA awarded 
only 178 grants, and yet those grants totaled $150 million of Fed- 
eral money. This was leveraged by an additional $330 million in 
local funds and $798 million in private sector funds. 

Ladies and gentlemen, this is a return of 7 to 1, and I think that 
is a pretty good deal in this day and age. On top of that, 28,489 
jobs were created. That accounts for one job for every $5,000 of 
Federal money spent. EDA is a proven mechanism for such a deliv- 
ery system. And Mr. Chairman, I commend you in your efforts in 
leading this cause. 

Second, has to do with the economic development districts them- 
selves. My good friend and cohort. Ken Green, gave excellent rea- 
sons why this organization — these organizations ought to be funded 
at a greater level. We know that no work can get done unless you 
have staff to do it. 

The economic development districts provide the manpower to 
make economic development programs work, certainly among our 
rural areas. We have a 25-year proven track record in administer- 
ing EDA grants and providing small business loans. Studies within 
EDA and by a separate task force of which I have the honor of 
serving, attest to FDD's successes, and comments from both studies 
recommend increased funding to create more new EDDs, plus as- 
sisting current EDD's increases, something we haven't seen in 12 
years. 

Now, we did receive a slight increase 2 years ago, and most of 
it was taken away fi-om us this year. This means that most of us 
are operating a staff, as Ken said, on $55,000 a year, and we have 
been doing that for 12 years. Some of our EDA program operators 
are in better shape that we are and receiver quite a bit more. We 
would like to see — we would like to see the funding for economic 
development districts increased to $130,000 per FDD and to allow 
for the funding of at least 50 new economic development districts. 
We would like to get out of the fact that we are still being funded 
at the 1970s level and we are still being required, of course, to 
have our own 25 percent match. 

Third, revolving loan funds. I am very are pleased to see that 
this committee is already looking into this program. There are 
areas that need to be addressed, not the least of which is the 
defederalization of once spent revolving loan funds, which we 
strongly encourage. FDA's quality action team recommendations 
had included that these funds be decentralized. 

I applaud your strong support in this effort. Please note, ladies 
and gentlemen, we are not asking that accountability be done away 
with. We not only expect but we urge accountability. However, 
defederalization would give us at the local level a flexibility that 
would increase the effectiveness of an already strong program. 



237 

Last, defense conversion. As this issue looms larger on the hori- 
zon, many areas will experience a significant impact on their eco- 
nomic structure. In many cases an already extremely tough situa- 
tion in the economy is going to come almost to a breaking point. 
We urge this committee to utilize the resources and expertise of the 
economic development districts as part of its defense conversion 
strategy. 

Mr. Chairman, and ladies and gentlemen, thank you very much 
for giving me the opportunity to come before you and to speak my 
piece. I would be glad to answer any questions. 

Mr. Wise. I thank the entire panel. And I just wanted to note 
that this Chair is feeling a little humbled because of my prede- 
cessor in this chair. Congressman Oberstar from Minnesota, and 
Mr. dinger, who has altered the EDA legislation in the past years 
and educated a lot of us as to the significance of the ARC. I am 
trying to do right. 

Mr. Oberstar. We are watching. 

Mr. Wise. I have them at both ends, if you notice that. 

Several of you have commented on the need for 2-year authoriza- 
tion. I think Mr. Green stated in his testimony the desire to get 
it out of an election year process which is probably what it would 
be in if you only had a 1-year authorization. Are there some addi- 
tional reasons that anyone can come forward with as to why it 
ought to be more than a 1-year authorization in terms of adminis- 
tration, being able to plan, whatever? 

Mr. Paciocco. Mr. Chairman, I think one of the things that I am 
concerned about is that EDA has had a tough row to hoe for many 
years now. At this point we have an administration that is very 
open to economic development, jobs program at the local level. We 
certainly have a Chairman and a committee that is very open to 
this. And for fear of using a cliche, I just believe in striking while 
the iron is hot. And I just think the situation now is conducive to 
this situation. And rather than do it for 1 year and have to go 
though this process again, I would certainly like to see us be able 
to nail this down a little better. 

Mr. Wise. Is it your position, then, Mr. Paciocco, that you would 
rather see the subcommittee go through a more extensive process 
in terms of reviewing EDA and in terms of upgrading what needs 
to be improved as opposed to simply pushing through a 1-year au- 
thorization and then conducting oversight hearings to come back 
again next year? 

Mr. Paciocco. Yes, sir, if need be, I certainly do. 

Mr. Wise. That is part of the debate — that is actually not a de- 
bate but a question that the subcommittee needs to resolve within 
itself. 

My initial reaction is that if you are going to have all of this, you 
ought to just have all this fun one time, and at least one time in 
a 2 to 3 year period as opposed to doing everything the subcommit- 
tee has done ie. three hearings, plus one on defense conversion, 
plus working out the details of a bill, taking it to the Floor, then, 
of course, there is another body apparently, they tell me that you 
must run this through, and then coming right back and having to 
start all over again. 



73-118 0-93-10 



238 

The question I have for anyone on the panel, and I will ask this 
also of the following panel, is that there has been a lot of discus- 
sion about how much autonomy at the regional level of the EDA 
versus how much autonomy at the Washington headquarters as far 
as approving applications, grants, and whether or not there is too 
much of a bureaucratic delay in moving things from the local eco- 
nomic development representative to the regional offices, in our 
case, Philadelphia, and then moving it on to Washington. Does any- 
one care to comment on that? Mr. McClure? 

Mr. McClure. The EDA Center Program Directors, have had 
some discussion with EDA in regard to that, it would facilitate the 
flow of paperwork and decisionmaking considerably if, regional dis- 
tricts of EDA had more authority to make decisions at that level 
on funding requests and programmatic changes, whatever. 

Mr. Wise. Am I correct, is your regional center Atlanta? 

Mr. McClure. Atlanta, yes. 

Mr. Paciocco. Mr. Chairman, I would also add that a few years 
ago when Ms. Hambers, then Assistant Secretary, selected a com- 
mittee or task force outside of her staff to study the economic de- 
velopment district situation, there were I think about 25 of us that 
were invited to be on that task force. And we looked at this issue 
very extensively. 

The recommendation out of that committee, which the Secretary 
accepted, was that the EDA regional offices did, indeed, need to 
have more autonomy so that the paperwork flow could move much 
more quickly. 

We found that there was no reason why the regional EDA offices 
in Atlanta, Philadelphia, et cetera, could not handle the approval 
of public work grant applications for instance up to a certain 
amount. Many of us, of course, would fall into that area, £ind just 
give them the authority to make those decisions and not have to 
go through them and then up to the national office and through all 
of that bureaucracy because it would get to us. It would certainly 
increase that: 

Mr. Wise. Would it be your observation that this could be done 
administratively or does it actually need to be written into the leg- 
islation? 

Mr. Paciocco. Not being an expert on what happens in Washing- 
ton, I am not sure which is the best way. 

Mr. Wise. I haven't figured out who is an expert on what hap- 
pens in Washington. 

Mr. Green. I think it can be worded in the legislation to direct 
the administration of the legislation in a manner that would decen- 
tralize the level of project funding at the regional level. 

I think that in the past we have had excellent experiences of the 
regional offices administering programs, particularly when we had 
the flurry of activity under the local public works program during 
the Carter administration and the regional offices showed a great 
deal of exercise of authority on the processing and determination 
of expenditures for projects. 

I also feel that the regional offices are much closer to us at the 
local level. They have a network of economic development rep- 
resentatives in each State. We at the local level are in constant 
contact with those representatives and they of course are in con- 



239 

stant contact and communicate with their regional offices, ours 
being in Philadelphia. By the time we process a project or applica- 
tion through our regional offices and go through the activities nec- 
essary to quaUfy that particular project for a final application invi- 
tation, we view, and I think with certain justification, that its proc- 
essing on to Washington is simply a step in politics and not par- 
ticularly a step in the technical aspects of putting dollars to work 
for economic development. And I think it would be befitting in new 
legislation to provide a little bit tighter guidance on the adminis- 
tration of the bill. 

Mr. Wise. Thank you. 

A final question to Mr. McClure and Mr. Thornton. Could you ex- 
plain a little bit about the interaction that takes place between one 
of the EDA university centers and other governmental entities that 
are funded at least by the government to provide services to the 
same clientele? And I am specifically thinking of small business de- 
velopment centers, although there may be other enterprises as 
well. How do you coordinate? How do you avoid duplication? How 
do you maximize your resources? 

Mr. McClure. Mr. Chairman, in answer to that question, at our 
Center we have the western regional office of the North Carolina 
small business development program. The SBOC program deals 
primarily with small business. The EDA Center Program: (1) deals 
more with the community development; (2) is beginning to work 
with industry to get into some tech transfer-t3^e programs; and (3) 
is involved in leadership development. For example, the lending 
consortium that we developed, builds the infi-astructure for small 
business development. 

One of the other things we do at our Center is incubator develop- 
ment, that is to say, small business incubator development. We 
also operate a 504 loan program through a certified development 
corporation. These programs build the infi-astructure for the other 
programs to come along and develop the small business clients' op- 
portunities — ^the entrepreneurs. So we very carefully guard those 
relationships to ensure there is no overlapping and duplication. A 
lot of our Centers have similar programs that work along the same 
lines to avoid duplication. 

The EDA Center will work with the larger projects such as man- 
ufacturing and the tech transfer; and the SBDC primarily works 
with the smaller businesses and some manufacturing. SBDC's also 
develop business plems, loan packages, market studies and that 
kind of one-on-one type counseling. 

Mr. Wise. Mr. Thornton? 

Mr. Thornton. The technical assistance Center at West Virginia 
Tech operates both. It is my job to see that they don't — ^we don't 
have enough funds to be duplicating efforts. So these are separate, 
and as Mr. McClure said, that is primarily your area, EDA Center 
works with government communities and nonprofits rather than 
small businesses. However, we have helped to augment some of 
their programs and give technical assistance that small business 
people don't have the expertise to do. 

Ms. MOLINARI. I would Uke to ask to submit Congressman Peter 
Hoekstra's statement in the record. And I also woiild be happy to 



240 

yield to Congressman Clinger so that he can ask his questions be- 
fore we go vote. 

[Mr. Hoekstra's prepared statement follows:] 

Statement by Congressman Pete Hoekstra (MI-R) Before the Public Works 
AND Transportation Subcommittee on Economic Development 

Thank you Mr. Chairman and Ranking Member Ms. Molinari for holding this 
hearing to discuss the reauthorization of the Public Works and Economic Develop- 
ment Act. The Clinton Administration and the Congress have talked a lot about the 
importance of programs that stimulate economic growth and help our country meet 
the challenges of a global marketplace. As a new member of Congress, I am inter- 
ested in learning more about the role that the EDA plays in economic development. 

I believe that various aspects of the EDA are valuable. For example, the EDA 
University Centers provide assistance to communities facing major job losses and 
economic distress. In addition, the University Centers help companies become more 
competitive in a global marketplace. I have been impressed by some of the accom- 
plishments of the EDA University Centers in my state. The University Center for 
Economic Development at the University of Michigan has been working to help 
Michigan communities recover from General Motors plant closures and the immi- 
nent closure of the Wurtsmith Air Force Base. These programs can positively impact 
economic growth and new job creation. 

I support efforts to provide economic development assistance to American busi- 
nesses and communities. However, before we seek to reauthorize or expand existing 
programs, we must make certain that they are functioning effectively. At this time 
of severe budget constraints, we cannot continue to throw good money after bad. 
The EDA has not been reauthorized for twelve years and it is likely that some 
changes in the law are necessary to reflect current needs and to ensure that we 
spend taxpayer dollars wisely. I am pleased that this committee plans to take a 
close look at the EDA program to determine what works and what doesn't before 
moving forward with the reauthorization. 

I look forward to hearing the testimony. Thank you, Mr. Chairman. 

Mr. Clinger. I thank the gentlelady, very much. 

I just had a couple of questions and I want to commend the panel 
for their testimony here this morning. As I have indicated, we have 
had the EDA and the ARC has been around for a period of time 
and have not been reauthorized for a period of 12 years. And I 
think it is apparent that that may be something that is going to 
end. 

A couple of questions about the reauthorization. One of the 
things that has developed since EDA was last authorized is some 
new Federal initiatives in the area of economic development. I am 
thinking specifically of the Rural Development Administration in 
the Department of Agriculture. How do you see that-does that 
change the mission, in your view, of EDA that we now have? Do 
you see that as a competitive kind of a thing? It is something that 
is going to have to be somehow integrated into an overall effort? 
Would you see EDA becoming a coordinating agency? 

Give me your views on how we coordinate or correlate Rural De- 
velopment Administration and some of the other initiatives that 
were contemplated by the Clinton administration with the existing 
EDA? 

Mr. Paciocco. In North Carolina, sir, and most of the other 
States that I dealt with as they began their rural development 
council, the Rural Development Council itself is not really set up 
to do project-tjrpe activities. I am very active in North Carolina in 
our rural development council, being on the executive committee 
and serving as chairman of their executive director search commit- 
tee. I see no duplication at all. 



241 

What I see, rather, is an organization through RDA that is going 
to help us open some bottlenecks that exist in the bureaucracy of 
all of our programs. Using the Monday morning management group 
and using the other activities of the rural development councils, I 
think this is going to be a tremendous assistance in my shop for 
my organizations where our local governments are battling a bot- 
tleneck they just can't get through any other way. 

Mr. Clinger. So you don't see this as being in any way duplica- 
tive? 

Mr. Paciocco. No, sir, do I not. If they started coming out with 
loan programs or started doing public works projects, then yes, I 
could see possibly a duplication. But I don't think that is going to 
happen. 

Mr. Clinger. Anybody have a different view on that? Okay. 

We have spent a couple of agonizing weeks here, Members of 
Congress testifying before the Base Closure Commission and today 
the shoes are beginning to drop over there. You testified, I think, 
that you hoped to see an increase in Title I funding for public 
works grants, but what about Title IX? 

Shouldn't there be recognition here that we are going to have 
some pretty severe dislocations because of the base closing situa- 
tion? Should we give Title IX more attention and more primacy 
perhaps? 

Mr. Paciocco. Yes, sir, there is no doubt about it. That is going 
to be a significant piece of the puzzle that is going to have to be 
dealt with. 

I am pleased to see in those areas — and we are fortunate at this 
point in our region to not have one of those bases that is on the 
list — but I am pleased to see that money is being set aside in var- 
ious programs for the defense closures and the impact that is going 
to bring about. I think EDA is going to be extremely important 
through their Title IX program and what funding is going to be 
needed at this point I am not ready to speak to that. 

Mr. Clinger. All right. EDA is really best positioned to deal with 
this, because we have a delivery system in place, we have an estab- 
lished organization and a procedure for reviewing these things and 
also the ability to react expeditiously to the needs as they arise. 
Well, I know we are short of time, but I did want to get those two 
points in. I thank the gentlelady for allowing me to question. 

Mr. Wise. If I could respond to the gentleman on RDA, the ques- 
tion may become academic because it is my understanding that the 
Ag Subcommittee has zeroed the RDA out. It is undertaking the re- 
organization of the EDA before the Secretary does. 

At this point we will be in recess to resume in about 15 minutes. 
Thank you. 

[Recess.] 

Mr. Wise. The hearing will resume. 

When we finished, the gentleman fi-om Pennsylvania, Mr. 
Clinger, was asking questions. I now turn to the gentleman fi-om 
New York, Mr. Nadler for any questions he might have. No? 

The gentlewoman fi*om New York, Ms. Molinari. 

Ms. Molinari. At this point, out of respect for the members of 
the next panel, who are waiting and we are about to have several 



242 

more votes, we would like to at least get them seated. So I will sub- 
mit the wiliiesses' questions in writing. 

Mr. Wise. Without objection, we will leave the record open. And 
we will submit further questions. I thank the panel for their help. 
And I think that we will be in touch. Thank you. 

[Subsequent to the hearing, additional questions were submitted 
to Mr. Paciocco by Ms. Molinari. The questions and responses fol- 
low:] 



243 



nA 



K§ 



rfATIONAL ASSOCIATIOiy OF DEVELOFMEIHT ORGANtZATiOIHS 

444 North Capitol Stnet, N.W., Suite 630, Washington, D.C. 20001 202-624-7806 FAX 202-624-8813 

July 9, 1993 

The Honorable Susan Molinari 
U.S. House of Representatives 
123 Cannon House Office Building 
Washington, DC 20515 

Dear Rep. Molinari: 

On behalf of all NADO members, I want to thank you for your leadership as Ranking Member 
of the Subcommittee on Economic Development. I appreciated the opportunity to testify before the 
subcommittee, and look forward to working with you as the subcommittee develops legislation to 
reauthorize the Economic Development Administration (EDA) and the Appalachian Regional 
Commission (ARC). In this regard, 1 am pleased to answer the following questions. 

Q: 'Your testimony notes the current moratorium on new projects caused by the EDA inviting 
applications for additional projects in anticipation of receiving the $94 million in President 
Climon 's stimulus proposal. How has this backlog affected the ability of local developmem 
organizations to plan for and move forward on projects?' 

EDA grants are specifically for private sector related projects. In many instances, timing is 
critical. In the business environment, needs and concerns must be resolved expeditiously. A business 
will not, and in many cases cannot, wait for the government to grind through the grant making 
process - especially when the process has ground to a halt. If a business cannot close a deal when it 
wants to in one area, it will find another suitable location that can better meet its time constraints. 
And this can mean the loss of potential jobs for a region. 

The backlog on new EDA grants increases the time it takes fix)m the beginning of negotiations 
for a project and to ground breaking. This derails the planning process and makes comprehensive 
community and economic development difficult. EDA funded economic development districts 
(EDDs) must prepare an Overall Economic Development Program (OEDP) as part of their responsi- 
bilities to EDA. The moratorium on new projects hinders the timely and complete implementation of 
OEDPs. 

The existence of the backlog demonstrates the great need for additional funding for EDA so 
that ground may be broken on these projects and long-term jobs may be created. The backlog is due 
simply to inadequate funding. As you may know, EDA invites applications for grants from 
preapplications EDA deems needed and worthwhile. Once an application for a grant is invited, 
grantees should feel confident that the grant will be processed promptly and that funding for a project 
will be forthcoming. As it stands, no new invitations for grants are being offered and applications in 
the pipeline are not being processed, and there is no indication when this will change. The problem 



244 



The H'-n. Susan Molinari 
Responses to EDA Questions 
Page two 

occurred when EDA invited applications for the supplemental funds President ainton requested in his 
stimulus bill that died in the Senate. Due to this backlog, a large portion of the amount proposed for 
FY 1994 has been obligated. Additional funding is necessary. Therefore, in my testimony I re- 
quested an additional $100 million for EDA public works grants. 

Q: 'Given the overlapping jurisdictions of various Federal programs for economic development, how 
could this Committee improve the ability of the EDA to coordinate the delivery of Federal 
programs?" 

At the federal level, there is little EDA can do to coordinate various federal agencies economic 
development programs. However, within the agency there is much they can do to coordinate their 
programs to eliminate duplication that exists. EDA fosters coordination at the local level by fimdrng 
the 301(b) Economic Development District program. EDDs have a major function helping coordmate 
the delivery of programs at the local level. It is very important for local people to determine their 
needs and how federal (as well as state and other nonfederal programs) should be used to best meet 
the challenges they face. This cannot be accompUshed from Washington, DC. Increased fiinding for 
EDDs would enable local people greater access to more and better trained professional staff. It is this 
technical capacity that is so important (and so limited) in many rural and distressed communities. 
Without EDDs, many rural and small metropolitan communities would not have the capacity to 
coordinate, at the local level, the federal assistance necessary to meet their development needs. 

Because of the successful history of EDDs, we feel this program needs to be strengthened and 
used as a model. In my testimony, I asked the subcommittee to support increasing the authorization 
for each district to $130,000. I stress that most districts have not had a funding increase since the 
1970s and are being asked to do more with funding that has not kept up with demand or the rate of 
inflation. 

One measure EDA could take, at the federal level, to coordinate delivery of federal programs, 
which 1 hope the subcommittee would support, would be to work with other agencies to standardize 
requirement procedures and otherwise remove impediments to their programs. I site an example fix)m 
Kansas, in which loan application forms for a number of federal and state programs where standard- 
ized, thereby greatly simplifying the applications process. These efforts where led by NADO 
member Jack Alumbaugh, executive director of the South Central Kansas Economic Development 
District and coordinated by the Kansas Rural Development Council. 

1 appreciate the opportunity to answer these questions and I hope that my responses help your 
efforts to reauthorize the Economic Development Administration. If NADO may be of any further 
assistance, please do not hesitate to contact Aliceann Wohlbruck or Scott Whipple on NADO's staff. 

Sincerely yours, 

Robert J. Paciocco 
NADO President 



245 

Mr. Wise. At this point we would call the second panel. Joseph 
A. Marinucci, the Director of Economic Development for the City 
of Cleveland, speaking on behalf of the National Council for Urban 
Economic Development; Donald Dell, from the Carroll County 
Board of Commissioners, speaking on behalf of the National Asso- 
ciation of Counties; Rabbi Shmidman, Executive Director of Council 
of Jewish Organizations of Brooklyn, New York, accompanied by 
Paul Chemick, Director of Operations, Council of Jewish Organiza- 
tions of Boro Park, Brooklyn, New York, and Nancy Carin, Direc- 
tor, Business Outreach Center, Council of Jewish Organizations of 
Boro Park, Brookljni, New York; and Philip D. Koos, Chief Execu- 
tive Officer of Van Emmons, Senior Population and Marketing 
Analysis Center, Towanda, Pennsylvania, and President, Public 
Works and Economic Development Association. 

I recognize Mr. Nadler. 

Mr. Nadler. I apologize for coming to the meeting late. We had 
a meeting of the Committee on the Holocaust, and I will have to 
leave to return to that meeting. And let me commend you for hold- 
ing today's hearings on economic development as we prepare to re- 
authorize the EDA for the first time in more than a decade. And 
in the interest of time, I ask that the rest of my opening statement 
be submitted for the record. I will give it to you. 

Mr. Wise. Without objection. 

[Mr. Nadler's prepared statement follows:] 

Statement by Rep. Jerrold Nadler, Subcommittee on Economic Development, 
Hearing on the Reauthorization of the Economic Development Administra- 
tion, June 24, 1993 

Mr. Chairman, I want to commend you for holding today's hearing on the reau- 
thorization of the Economic Development Administration. As we prepare to reau- 
thorize EDA for the first time in more than a decade this Committee has the oppor- 
tunity to take a fresh look at this agency and the vey important work it does. 

I believe that we must seize this chance to explore new ways of serving American 
business — in essence to deliver the needed services in new and innovative ways. We 
hear a great deal of talk these days about reinventing government, but today we 
will hear from some people who are successfully doing just that. There are a lot of 
exciting ideas being developed in our communities, and I'm extremely pleased that 
this committee is taking the time to hear from people who have been making a dif- 
ference. 

Government can play a positive role in our economic future when it provides the 
tools for business to grow and prosper. When government does its job, business and 
our communities benefit. Mr. Chairman, I look forward to working with you to re- 
fine the original vision of EDA to assure that it fulfills that vital mission. 

Mr. Chairman, I am pleased to welcome Rabbi Morris Shmidman, the Executive 
Director of the Council of Jewish Organizations of Boro Park. 

Located in the Boro Park section of Brooklyn, CoJo has a remarkable track record 
of providing a broad range or social and community services. Whether helping local 
businesses grow and succeed, or serving the elderly or the least fortunate, even 
helping families cope with bank failures, CoJo has always brought an innovative ap- 
proach to every task great or small. 

Today, we will hear about CoJo's Business Outreach Centers which have dem- 
onstrated new ways to connect local businesses with the broad range of existing 
business services, extending the reach of those programs and making their oper- 
ation more efficient. 

Most importantly, the Business Outreach Centers have been able to connect com- 
munities, isolated by language, culture and other factors, with each other and the 
business services that so often fail to reach the citizens who need them most. 

Mr. Chairman, once again, America's future can be found in Brooklyn. I am privi- 
leged to introduce to the Committee, Rabbi Shmidman, under whose leadership the 
Business Outreach Centers were initiated and grew. 



246 

Mr. Nadler. Thank you. 

Second, Mr. Chairman, I want to say that I am very pleased to 
welcome Rabbi Morris Shmidman, the Executive Director of Coun- 
cil of Jewish Organizations of Boro Park, Brooklyn, which is in my 
district, who is accompanied by Paul Chemick, the Director of Op- 
erations of COJO, as we refer to it and Nancy Carin, Director of 
the Business Outreach Center Network. 

COJO has a remarkable record of providing a broad range the so- 
cial and community services, whether helping local businesses suc- 
ceed or serving the elderly, even helping families deal with bank 
failures. COJO has always brought an innovative approach to every 
task, great or small. Today we will hear about COJO's Business 
Outreach Centers which have demonstrated new ways to connect 
local businesses with the broad range of existing business services, 
extending the reach of those programs and malang their operation 
more efficient. 

Most importantly, the business outreach centers have been able 
to connect communities isolated by language, culture, geography, 
with each other and the business services that have so often failed 
to reach the citizens that need them most. Mr. Chairman. It is has 
been said that one out of every seven American citizens can trace 
their family origins to Brooklyn, and once again we see that Ameri- 
ca's future can be found in Brooklyn. 

I am pleased to introduce Rabbi Shmidman under whose leader- 
ship the Business Outreach Centers in New York City alone were 
initiated and grew. And thank you for this time, Mr. Chairman. 

Mr. Wise. Thank you, Mr. Nadler. 

At this point I turn to Mr, Marinucci. I will also say to the panel- 
ists that their written statements in their entirety have been made 
a part of the record. 

TESTIMONY OF JOSEPH A. MARINUCCI, DIRECTOR OF ECO- 
NOMIC DEVELOPMENT FOR THE CITY OF CLEVELAND, OH, 
SPEAKING ON BEHALF OF THE NATIONAL COUNCIL FOR 
URBAN ECONOMIC DEVELOPMENT; HON. DONALD DELL, 
CARROLL COUNTY, MARYLAND BOARD OF COMMISSIONERS, 
SPEAKING ON BEHALF OF THE NATIONAL ASSOCIATION OF 
COUNTIES; RABBI MORRIS A. SHMIDMAN, EXECUTIVE DI- 
RECTOR OF THE COUNCIL OF JEWISH ORGANIZATIONS OF 
BORO PARK, NY, ACCOMPANIED BY PAUL CHERNICK, DIREC- 
TOR OF OPERATIONS, COUNCIL OF JEWISH ORGANIZATIONS 
OF BORO PARK, BROOKLYN, NY; AND PHILIP D. KOOS, CHIEF 
EXECUTIVE OFFICER OF VAN EMMONS SENIOR POPU- 
LATION AND MARKETING ANALYSIS CENTER, TOWANDA, PA, 
AND PRESIDENT, PUBLIC WORKS AND ECONOMIC DEVELOP- 
MENT ASSOCIATION 

Mr. Marinucci. Thank you, Mr. Chairman. I thank the Chair- 
man and the committee for this opportunity to address you today. 
I am, as you mentioned, Joe Marinucci, the Director of Economic 
Development for the City of Cleveland, and unlike a lot of the peo- 
ple that you heard from on the first panel and maybe some of the 
colleagues on the second panel, I represent an urban constituency. 
I am here representing the National Council for Urban Develop- 
ment, which represents over 1200 national economic development 



247 

professionals and organizations who are involved on a daily practi- 
tioner basis in the area of economic development. We in an urban 
setting obviously have much different problems and you have be- 
fore you our written testimony. I would, at this point, like to simply 
augment our written testimony by stressing a couple of points. 

Resources specifically designed to assist urban areas in their job 
creation efforts have been reduced over the last several years. With 
the demise of the UDAG program, which I think you all know has 
been an integral part of the strategy over the last 15 years in 
terms of urban development, and the restrictions as it relates to 
the CDBG program in terms of using that particular mechanism 
for economic development, there are very few programs available to 
help urban areas in their efforts. Cities like Cleveland and other 
urban areas really are looking towards EDA to provide the infra- 
structure help necessary to relate those investments to job creation 
activities. 

CUED has had a long and successful relationship with EDA and 
I would stress that our staff has worked closely with EDA staff in 
terms of program development across the board in terms of the re- 
authorization programming that is made available through the De- 
partment of Commerce and specifically through EDA. 

Unfortunately, EDA does not nor does any other Federal agency 
really have direct responsibility for urban economic development 
initiatives. And that, I think, is really troubling in the sense that 
we in urban centers have such challenges in terms of our job cre- 
ation initiatives. And specifically on a day-to-day basis, that is 
what my responsibilities are: trjdng to create job opportunities for 
individuals, residents within our communities, and also tr5dng to 
increase the tax revenues that would be available to provide serv- 
ices for our constituents. 

In 1992, rural areas of the country received 80 percent of the 
grant distribution allocation of EDA funds. Obviously, we believe in 
an urban setting that that distribution does not reflect the demo- 
graphics of this Nation. 

I think according to the 1990 census, 65 percent of the popu- 
lation of our country resides in urbanized areas. In addition, 62 
percent of poverty currently resides in these urbanized areas as 
well. And on a personal note I would say that in the City of Cleve- 
land, we saw a significant increase in the levels of poverty between 
1980 and 1990. 

In 1980, the City of Cleveland reflected a 20 percent poverty 
level and that rose dramatically to 30 percent in the 1990 census, 
and we in the urban areas must have the opportunity to access the 
dollars that EDA represents to alleviate those urban needs. 

In Cleveland we have been successful in terms of accessing EDA 
dollars. We have specifically used the infrastructure program to 
create industrial p£U"ks which have had a net effect of creating jobs 
for our residents. Two major industrial parks that we have been 
able to fund through EDA matching dollars have created in excess 
of 1000 jobs assisting over 15 companies in terms of locating within 
those parks. 

Clearly, EDA historically has been an important part of our eco- 
nomic development strategy and we think, again in light of the 
President's economic stimulus package, which unfortunately was 



248 

not funded, we think it takes a more critical role in terms of the 
future of our ability to access and meet the challenges of our urban 
areas. I would also like to point out, and maybe diverting from the 
core concepts reflected in the written remarks, to augment com- 
ments made in the first panel concerning the administration of 
EDA's revolving loan funds and the de-federalization as it was re- 
ferred to today. 

I would echo those comments. We have a revolving loan fund 
that was funded through seed capital provided by EDA revolving 
loan capacity. And we are now relending those. I would suggest to 
the committee that EDA take the same approach that the UDAG 
program did under the Department of Housing and Urban Develop- 
ment in cataloguing those dollars as miscellaneous income. 

And in the UDAG scenario, the revolving loan monies that are 
returned to the community can be used for any Title I eligible, 
CDBG eligible activity. So we would suggest to the committee that 
we also look at that. This is an important issue in terms of effec- 
tiveness of the RLF program. 

In closing, I would urge the committee to support the reauthor- 
ization of the Economic Development Administration. I would also 
echo what has been talked about on the first panel relative to a 
two-year authorization. We think that type of stability would sig- 
nificantly help the stability of the program in that portfolio, and in 
addition we would ask that the committee consider a more equal- 
ized distribution of the funds, again, given the lack of Federal re- 
sources for urban economic development activity. And it is infra- 
structure that is necessary to meet those challenges. We'd look to 
try to equalize more fairly the distribution between rural and 
urban areas. 

On behalf of CUED, I would like to thank you again for the op- 
portunity to address you and obviously would be available for any 
questions at the end of my coUeagues's remarks. 

Mr. Wise. Thank you very much. The next to testify, represent- 
ing the National Association of Counties is Donald Dell, the Presi- 
dent of the Carroll County Board of Commissioners, Carroll Coun- 
ty, Maryland. 

Mr. Dell. Thank you, Mr. Chairman. I am Donald Dell, Presi- 
dent of the Carroll County, Maryland Farm Board of County Com- 
missioners. I have been a farmer all of my life. So I got a little 
tongue-tied there. 

I am testifying on behalf of the National Association of Coxinties 
and as a member of NACo's Agriculture and Rural Affairs Steering 
Committee and also an elected official from the local jurisdiction. 

I thank you for the opportunity to make comment here in sup- 
port of continued and additional assistance for economic develop- 
ment at the local government level. I am one of three commis- 
sioners for a growing, historically agricultural county 50 miles 
north of where we are sitting. 

As you well know, we at the local level have been challenged to 
provide more services to more people with less help from other gov- 
ernment levels. Some of the demands from services has come from 
population growth, but the greater part of it has come from man- 
dates passed by State and Federal authorities and from general 
economic stagnation. 



249 

In that latter regard, we, as are all levels of government, always 
asked to do more when our ability is most strapped and we have 
the least flexibihty to expand revenues. Let me give you a few sta- 
tistics specific to our situation and tell you why economic develop- 
ment is so important to us. 

In the last three years we have had to balance budgets in the 
face of about $18 million in five or six rounds of revenue reductions 
that have been rolled down to us by the State and that we have 
lost in local revenue sources. Our operating budgets have been in 
the $110 million to $120 million dollars range during that time 
fi-ame. 

So the reductions have been very substantial to us; again, while 
demands for services have continued to increase. So we have those 
things you and the State law has mandated we must do. 

We have all kinds of mandates, of course, for education, clean air 
and water, handicapped access for highway safety and pollution 
abatement controls and hazardous waste management; all good 
things and costly things that greatly restrict what resources we can 
apply to other continuing needs of our citizens. 

We estimated earlier this year that as much as one-sixth of our 
Board of Education budget is spent for mandates, approximately 
$20 million. We just approved a capital improvement plan which 
includes $2 million for handicapped access. We just opened a $2 
milhon septic treatment plant because this waste cannot be land 
appHed anymore. All good things again, but where does the money 
come fi-om? Five years ago we had a outstanding debt for capital 
projects of $33 milhon. Today that debt is more than tripled to 
$108 million. 

We have had to stop pay-as-you-go financing so that those re- 
sources could be applied to our current year needs. Not a very good 
philosophical basis for financing debts. But in fact our bond rating 
has been upgraded during this period. 

But the point here is that we are under increasing pressure to 
develop the ability to fiind as much of our budget as possible from 
local resources. And here is another fact. In 1980, a Httle over 80 
percent of our operating budget was fiinded by local sources. In 
1985 that figure was 84 percent. In the upcoming budget, that fig- 
ure has grown to 92 percent. 

And this is what we are asking: if you tell us to do something, 
consider the fiscal impact and consider that local governments, at 
least this one, has experienced decreasing flexibility to respond, 
and recognize that initiatives such as modest help with our own 
economic development can help us regain the ability through tax 
base expansion to develop opportunities appropriate to our area 
that will succeed not only locally but also help to contribute to the 
Nation. 

In Carroll County we have had a unique situation in that in the 
past our employment-unemployment ratio has not allowed us to 
participate in these funds and the problem is we have about 55 
percent of our people going outside of the country. We have a fairly 
good employment ratio, but we do not qualify for the funds. The 
fact that these citizens leave Carroll County impacts our funds. 
And so if you could consider some way to allow for those kinds of 
situations, we would appreciate that. 



250 

H.R. 2442 recognizes the fundamental need to restore a imme- 
diate government local partnership in order to achieve long-term 
economic recovery, undertake public works projects, create jobs, 
help domestic business competition in a worldwide marketplace 
and assist counties in undergoing economic conversion. EDA and 
ARC are as critically needed now in distressed areas as when these 
programs were first authorized. 

Trie current economic recession aggravated the imbalance be- 
tween revenues and expenditures. EarUer tiiis year, the National 
Association of Towns and Townships and the National Association 
of Development Organizations, released a survey tiiat was sent to 
1050 rural government officials and development organizations 
with 330 responding. I request that a copy of this survey be en- 
tered into the record. 

In this survey, over half said their governments had been forced 
to reduce fundmg for infrastructure projects. Of these, 40 percent 
postpK>ned road and other transportation improvements; 41 percent 
indicated their governments raised taxes or fees. The fiscal picture 
also is gloomy in large urban counties which have had to cut pro- 
grams, raise taxes and defer capital projects. 

In a NACo survey this year, of 66 of tiie largest counties local 
revenues and State aid are down and expenditures are higher than 
projected. Faced with these problems, urban counties use a veiriety 
of methods to balance their budgets, raise taxes and fees, spend re- 
serve funds and cut programs services and employees. I ask that 
this survey also be entered into the record. 

In stressed counties, urban, suburban and rural, developing and 
maintaining the infi-astructure is critical for economic development. 
EDA is an invaluable resource for these commiuiities, NACo ap- 
plauds emphasis in H.R. 2442 on planning the economic strategy 
for economic development. It will provide a focus for allocating 
scarce resources and establish measurable objectives. 

Strategic planning is critical for communities that are under- 
going economic conversion in an effort to diversify their commu- 
nities in response to closing miUtary bases and other factors. In 
conclusion, the Nation's counties officials wholeheartedly support 
reauthorization of the Economic Development Act and Appalachian 
Regional Development Act. 

Increased assistsuice are key components of the national com- 
prehensive study to achieve economic recovery. For these reasons 
the National Association of Counties urges prompt passage of H.R. 
2442. Thanks for allowing me to be here, and if you have questions 
I will be glad to try to answer them. 

Mr. Wise. Thank you very much. Our next witness is Rabbi 
Shmidman, the Executive Director of the Council of Jewish Organi- 
zations, Brooklyn, New York. 

Rabbi Shmidman. Thank you, Mr. Chairman. 

It is a pleasure and honor to be in your company and to have 
this opportimity to present what we consider an innovative and 
challenging opportunity for this Congress. I am exceedingly grate- 
ful to you for the welcome and to my Congressman, Congressman 
Nadler, for his gracious words. We are fortimate in having him as 
our Congressman and the Nation is fortunate in having hiin in the 
United States Congress. 



251 

I am delighted by the expressions of warmth and welcome from 
that wise and charming lady of the House, the Congressperson 
from Staten Island, Susan Molinari. I know in the protocol of this 
House she is listed as a ranking minority, but in the hearts of the 
people of Staten Island she is a ranking majority. We are delighted 
to have her as a Congressperson. 

Mr. Wise. Rabbi, I am totally flanked by New York. I am not 
sure that we will be able to bring up the urban/rural issue at this 
point. 

Rabbi Shmidman. You should know that we have a special con- 
nection between West Virginia and Boro Park. One of our residents 
in Boro Park has a company located in Greenbrier County in West 
Virginia that employs 500 people, IsraTech of West Virginia. We 
are delighted to have this persongd connection. 

Mr. Chairman, and distinguished members of the subcommittee, 
we are here to present what we consider to be an innovative, a 
proven, a cost-effective strategy for economic development. As we 
all recognize, small to mid-sized companies are the hidden heroes 
of stable local economies, job formation and regional growth. 

However, they often face almost impossible odds, particularly 
when their base of operations is in self-contained comm\m.ities. In 
fact, America's most vulnerable entrepreneurs are those in cul- 
turally, linguistically or geographically isolated areas. 

In hard to reach and distressed communities in other words, 
where business growth is handicapped by limited access to services. 
To make matters worse, the changing business environment in the 
last few years has only increased their burden. To survive, the 
small business sector along with potential entrepreneurs need in- 
formed and unobstructed access to top quality sources of advice and 
assistance. 

How they are to get it, of course, remains the problem. Though 
technical assistance along with a host of incentive programs and 
services is unquestionably out there, it has not been reaching the 
people and firms it is meant to serve. Discouraged by ignorance, 
misinformation or red tape, they either do their best or flounder. 

It is clear that something must be done to improve the current 
service delivery process. That is what you called for, in fact, is a 
new service dehvery model. One that strengthens the linkages be- 
tween the economic development agencies, business service provid- 
ers, educational and training institutions, and local entrepreneurs. 

The Council of Jewish Organizations of Boro Park has created a 
model which has already proven its merit in meeting these needs. 
The Business Outreach Center or BOC was created in 1989 as a 
demonstration project funded by the New York State Regional Eco- 
nomic Development pilot program. 

Since that time, its viability as a model has been proven through 
highly successful rephcations in diverse communities through New 
York Cit/s five boroughs. The Business Outreach Center network 
has been funded by a series of city, State and Federal sources and 
now serves six communities, representing wide ranging ethnic and 
cultural operation. 

In three years, the BOC has served 600 small businesses and po- 
tential entrepreneurs. The partners of these strongly-supported 
business outreach centers include all of the high profile city. State, 



252 

regional small business development centers, educational institu- 
tions, along with banks, utilities and other private sector service 
providers. 

The Business Outreach Center model presents a picture of an 
important strategy in supporting new business development, job re- 
tention, business expansion and small business stability. It is in 
fact a solution for the need for new service delivery mechanism to 
guarantee that important resources reach the businesses and indi- 
viduals which they were designed to support and in turn guarantee 
the future of local economies and the well-being of the Nation as 
a whole which is so dependent on the success of the small entre- 
preneur. 

The BOC is easy to use and easy to sell. It can be described sim- 
ply as a locally based facility which acts as a small firm's one-stop 
shop for all essential service. Each BOC is sponsored by a promi- 
nent community-based organization and connected to high quality, 
public/private economic development business assistance providers 
through formalized linkage agreements. 

BOC's broker and coordinate individualized technical assistance 
on behalf of local business owners. Linkage agreements with serv- 
ice providers ensure the warm welcome of our clients upon referral. 

With a BOC in the neighborhood or region, once marginalized en- 
trepreneurs have access to information and services that they 
might otherwise never have known about. Because the assistance 
is offered under the aegis of a trusted community organization, the 
likelihood that it will be accepted and applied is greatly improved. 

This has been demonstrated time and time again. A case in 
point, a small knitting mill which relocated within the city and in- 
creased employment from 15 to 65 during the pesik season. BOC 
staff walked this business through investigation of State, Federal, 
and private sector loan programs and introduced the owner to the 
Small College Development Center which provided business plans, 
resources and accessed on-the-job training programs and cut 
through city red tape to obtain a $50,000 relocation grant. 

In addition, BOC hooked this business up to an organization that 
places handicapped job applicants. BOC has forged special relation- 
ships with organizations like SCORE to provide export assistance 
to many of our Asian clients. And SCORE, together with Pace Col- 
lege Small Business Center Outstation, their specialists one day 
each two weeks at a local BOC office. Why? Because BOC coun- 
selors prepare clients, speak the language of the clients, and are 
trusted advocates. 

Thus, more than small business assistance to a handful of dis- 
parate companies, BOC represents a business revitalization strat- 
egy whose strength lies in a special emphasis on community-based 
outreach and ongoing case management throughout the service de- 
livery process. As such, it has potential for becoming a national 
model for helping small to mid-sized companies and individuals 
seeking to start their own business to develop the access and know- 
how. 

They need to take full advantage of the business assistance serv- 
ices and to make the transition to a higher performance workplace. 
In fact, BOC has been called a perfect economic development tool 
to reach the small business commimity. 



253 

In supporting new entrepreneurs, BOC has implemented a range 
of outreach workshops and connected individuals with entre- 
preneurial assistance programs initiated by a variety of agencies 
including the cit/s Department of Business Service, the American 
Women's Economic Development Corporation, and the council's 
only entrepreneurial training program for refugees. 

Recently a home-based, woman-owned design firm on Staten Is- 
land was linked to a Chinese garment association to develop sam- 
ples for a major minority design show, the Black Expo. The busi- 
ness owner was able to create samples in under two weeks and two 
BOCs in two different communities collaborated, the Lower East 
Side and Chinatown, to make this happen. 

I want to stress that a BOC is neither a direct business service 
provider nor does it compete for the same funding dollars as the 
Economic Development Community, public or private. It is, in es- 
sence, a broker. 

While BOC outreach is targeted to a community of entrepreneurs 
due to cultural, linguistic or geographic factors, BOC clients are not 
required to have a business within a limited geographical bound- 
ary. Therefore, BOC can assist a firm to accomplish its goals with- 
out any restrictions in terms of locale. 

This provides continuity and trust relationship. In essence, the 
business outreach network is a growing consortium of business out- 
reach centers now comprised of six, but hopefully of hundreds. It 
is an alliance for small business empowerment. 

The BOC network offers local economies the chance to benefit 
fi'om shared resources. It represents a business revitalization strat- 
egy which promises to revolutionize the ways local economies do 
business. The BOC network is a model for community 
empowerment and it tackles concerns that transcends geographic 
and cultural differences, the survival of small business and the sta- 
bility of local economies. 

It is a tool for minority business development for entrepreneur- 
ship and job retention for isolated and economically depressed com- 
munities. When a series of outreach centers come together, the re- 
sources dramatically increase. 

In New York we have seen many graphic examples of this bene- 
fit. Recently two recycling start-up companies were identified 
through BOC Staten Island and BOC in the Bronx. A long-time re- 
cycling business in Queens identified by BOC in Rockaway has be- 
come a resource for these new firms through our intervention. 

Wholesale marketing for products have been identified by BOC 
collaborations. BOC has connected inventors with technical institu- 
tions and small service firms for Federed, State and city procure- 
ment opportunities accessing the whole range of opportunities 
available to these businesses. And I must stress that our clients 
would not have been able to access these resources without us. 

Whether the reason is the lack of English skills or, in the case 
of small manufacturers, their intense involvement in day-to-day 
business leaving no time for outside investigation, or the very real 
cultural barriers preventing our clients fi*om entering a government 
office to ask for services, BOC intervention is their only avenue to 
needed assistance. 



254 

In the light of our successful efforts, Mr. Chairman, and mem- 
bers of the committee to create a model serving the needs of small 
business, new entrepreneurs and the development of economic pro- 
grams meant to serve them, I hope the committee will recommend 
legislation to establish the BOC Business Outreach Center as an 
economic development model for the Nation. I beheve that by de- 
ploying the BOC model, the Congress and EDA have a unique op- 
portunity to take the leading role in assuring a stronger and 
healthier, strong business communities throughout the country. 

In the package of our full testimony you will find a budget for 
a tjTpical BOC as well as additional and huge amount of material 
that we have surrounded you with. I thank you for your consider- 
ation and for the opportunity to present this new strategy to your 
committee and to the Congress. 

Thank you. 

Mr. Wise. Thank you very much for a very informative presen- 
tation and of course the accompanying information is very helpful 
there. There is a vote in the House right now. When the sub- 
committee returns, I will ask Mr. Chemick whether he has any ad- 
ditional statement to add and then Mr. Koos, we will turn to you. 
The subcommittee will stand in recess. 

[Recess.] 

Mr. Wise. This hearing of the Economic Development Sub- 
committee will resume. And when we left, I beheve I was getting 
ready to turn to Mr. Chemick, Director of Operations, Council of 
Jewish Organizations Brooklyn, New York for any remarks he 
might make. 

Mr. Chernick. Thank you, Mr. Chairman, I think we would like 
to just open for some questions. 

But, briefly, I would hke to add one or two comments on what 
Rabbi Shmidman has described. In addition to the Business Out- 
reach Center's ability to help small businesses access a full array 
of economic development and business assistance services in New 
York, we also had a very interesting experience working with a 
government program recently. The Department of Labor has initi- 
ated a new program called TEAMs, Technical Education and Ad- 
ministration Assistance for Mid and Small Sized Firms. 

And TEAMS came to New York and discovered our network and 
asked us to put together a local provider that, as envisioned, would 
transfer technology to small and mid-sized companies. I think they 
saw that the BOC model was an interesting model for them of how 
to collaborate and get all the service resources together in one area 
and then focus them on the points. 

And I think that they are going to continue to work with that. 
So, in terms of the EDA programs, especially the local technical as- 
sistance program, BOC is very well positioned to help get that re- 
source out to a number of communities without actually having to 
reestabhsh or to estabhsh straight local technical assistance pro- 
grams in different localities. And I would like now to just thank 
you again and turn it over to any questions that you might have. 

Mr. Wise. Thank you, we will hear ft-om the next witness and 
then open up for questions. I appreciate your patience, Mr. Koos, 
PhiUp Koos, Jr., Chief Executive Officer Van Emmons, Senior Pop- 
ulation and Marketing Analysis Center, Towanda, Pennsylvania. 



255 

Mr. Koos. I thank you, Mr. Chairman £ind members of the com- 
mittee for inviting me and the wait is well worth it. I have been, 
as you can see, in the field of economic development probably 
longer than I would like to admit. Mr. Clinger and Mr. Oberstar 
also go back to those years. 

Over the course of the years it has been my pleasure to work not 
only with EDA but with a variety of Federal, State, private, and 
local programs. I beUeve my remarks are being entered in the 
record and I appreciate that. I would however like to make a few 
comments in the interest of time. 

There are several things in EDA that set it apart. One is that 
it is very unique. And, yes, it can meet both the urban and rural 
needs. 

The second thing with EDA that has always struck me as unique 
is EDA does serve so well in my capacity because it was unique, 
yet it did not go through the State. It came directly to us. ARC is 
a wonderful program but it does go through the State and beUeve 
me there is a lot lost in translation there. 

The remarks were made earUer about dupUcation and I would 
like to address that issue. In my testimony, and here with me, I 
have but two examples that I know will point out to you that EDA 
it is not a duplication. In fact it may make sense to have several 
programs, the Farmers Home/RDA today, ARC, EDA, and even 
CDBG and of course UDAG which was a very wonderful program. 
In the case of the tannery, that tannery had been in operation 115 
years with the S£une local family. They reached a point where the 
sons no longer had interest in it. Westfield also had burned down 
its one grocery store and only restaurant, thus with the tannery 
situation up in the air, it was a dead town. 

We were able to put together a buyout on the tannery using bank 
funds. State funds EDA guarantees, and an EDA grant to help 
with the tannery waste water system, severed Farmer's Home Com- 
munity Facihties grants and loans were used to upgrade the entire 
community sewer system and to upgrade the municipal building. 
Today, the tannery is employing 200 people. Initially we were able 
to retain around 100 jobs and create 32 more. But again, the mix- 
ing matching and melding of each fund had its place, was very dis- 
tinct and there was no fear of dupUcation of services and a town 
lives. 

I have another example fi*om Mr. Boehlert's district that does not 
involve EDA, but gives you the idea, in spite of the urban New 
York area, that there is also a part of New York that is as agricul- 
tural as we in Pennsylvania are. This project was in the Mohawk 
Valley EDD and done through their Revolving Loan Corporation, 
the Urban Development Corporation and let's see what else, the 
New York Jobs Development Authority and the Farmer's Home 
Guarantee Program. They were able to put together a feed com- 
pany that did, in fact, not only retain but also created more jobs. 

Now, again this mix and match is not a bad thing, and in fact, 
in many cases works out rather well. 

Many times, it would be impossible for HUD to be well received 
in a rural area, and by the same token, Farmers Home would not 
be well received by those in an urban area. So I think you want 



256 

to take a look at this. I don't think there is that much mix or 
match that lends itself to duplication. 

The OEDP process is another unique thing within EDA. It works 
because it brings grass roots to Washington, D.C. and vice versa. 
It is a good system, it does work and it is a good planning process. 

I don't think I have to point out the things that have happened 
with EDA over the years. I, too, am thankful that finally we are 
out of the woods and we will get back to what EDA really stands 
for, the fine, unique program that it really is. 

PMAC, which you referred to, has really come about as a result 
of EDA and ARC. EDA provided us with the funds we needed to 
develop an export system for small businesses and basically PMAC 
is there as a result to serve small and mid-size businesses with 
those services that big businesses have daily, yet the size we serve 
would otherwise not have the same available to them. Incidentally, 
SB A has also put some funding into PMAC. And so again we see 
the mix and match and a very successful program. ARC, on the 
other hand, provided us with the staff money necessary or we could 
not have been up and running independently for a year this July. 
Again, don't be worried about duplication of services. In fact, var- 
ious different programs may, in fact, work well without duplication. 
I do, however, feel that EDA should be the centerpiece of economic 
development. 

Again, in the interest of time, I will certainly answer any ques- 
tions. I want to read you something and see if this sounds like 
1993. 

". . .A growing Nation cannot afford to waste its human and nat- 
ural resources — too often neglected and unused in distressed areas. 
Nor can we afford to shut out large numbers of our fellow citizens 
fi-om the fulfillment of hope that is shared by the rest of us. The 
millions of people living in those areas and regions of our Nation 
which have not shared fully in our general prosperity are in urgent 
need of help." 

There are three important things to remember about the EDA 
program. First, it is designed to extend opportunity to those now 
deprived of the chance to share in the full blessings of American 
life. As such it has a call upon the moral conscience of every citi- 
zen. 

Second, it will benefit all Americans. The experience of the last 
30 years has shown that the increasing prosperity of any region of 
this country increases the prosperity of the country. Higher in- 
comes for the people of IlUnois or Arkansas mean increased mar- 
kets for automobiles from Detroit and steel from Pittsburgh. Pov- 
erty in one area slows progress in other areas. 

Third, the job can be done. We have the resources and the skill 
to extend American abundance to every citizen in every region of 
this land. This program will help give us the instruments to match 
our determination to eliminate poverty in America. 

The conditions of our distressed areas today are among of most 
important economic problems. They hold back the progress of the 
Nation and breed a despair and poverty which is inexcusable in the 
richest land on Earth. We will not permit any part of this country 
to be in a prison where hopes are crushed, human beings chained 
to misery, and the promise of America denied. 



257 

These conditions of our depressed areas can and must be righted. 
In this generation they will be righted. 

These are the words of President Lyndon B. Johnson when he 
initially introduced the EDA legislation in 1965 and it is equally 
descriptive of today's situation. 

Thank you, Mr. Chairman. 

Mr. Wise. So it is. I appreciate that, Mr. Koos. 

Mr. Marinucci, I want you to know that I was interested in your 
figures and that certainly is an area that the subcommittee will be 
addressing. I think there is a pretty good balance on this sub- 
committee that ought to reflect your concerns. As many Members 
as we have from rural areas, we have just as many from urban 
areas. And indeed, based on the makeup of the subcommittee, I 
think all of the funding may be going to California. 

But you raise some good points and we will be happy to look at 
them. I think the key here is to look at how you make the most 
maximum impact with EDA funds wherever you are in making 
sure that each area receives as much of what it needs as possible. 

One observation I might make is that in some cases in infra- 
structure, and you might care to comment on this, I am wondering 
for instance whether in urban areas there might be a larger cost 
associated to infrastructure because projects tend to be bigger. And 
I guess my most vivid memory is standing — what is the bridge in 
New York City that is being refurbished? The Brooklyn Bridge — 
and realizing that the cost of that one bridge was more than the 
entire amount in the bridge fiind. 

So I wonder if we have people that say we will get more bang 
for the buck in a rural area as opposed to the spending in the 
urban area. 

Mr. Marinucci. Mr. Chairman, I appreciate the observation. 
There are very large projects of the type that you describe in both 
rural and urban areas. Each project should be judged on its eco- 
nomic impact. Clearly both in a rural and urban setting, we from 
an urban setting would have to justify the economic basis for the 
investment from a leverage perspective as well as a job creation 
perspective. Representing the City of Cleveland and CUED we 
would be happy to work with the committee to make sure that 
those types of analysis are consistent in terms of those instances. 
We would love the opportunity to work with you towards that end. 

I don't see the dichotomy. I think as long as the project has a 
significant leverage ratio and can create the types of jobs that 
make that ratio justifiable, I think we could work with you and I 
think we would be on the same page. 

Mr. Wise. The next question I would ask for anyone on the 
panel. EDA, by tradition, has focused its efforts on the most dis- 
tressed communities measured by unemployment, and poverty par- 
ticularly. Should that rule out EDA funds being used to go towards 
a more prosperous area but where jobs are created, the thought 
being that that helps generate tax revenues that can then be used 
for other areas? That has been brought up in several meetings that 
I have been involved in, field hearings and so on, and I would ap- 
preciate anyone's comment. 

Mr. Marinucci. From my perspective and CUED's, I think we 
address the traditional criteria that has been involved and I think 



258 

we would continue to work with the committee towards that end. 
We would agree that the largest economic impact in distressed 
areas is critical. 

Obviously from my perspective, speaking parochially from the 
City of Cleveland, we would want to see a greater level of Federal 
funding moved towards those areas and I would couple that not 
only with EDA, but also again with some of the direction that was 
being taken by the President in terms of economic stimulus pack- 
age. 

Mr. Wise. Mr. Chemick. 

Mr. Chernick. I would like to add that sometimes a community 
may not be the most distressed commiuiity, but there is a balance 
going on in that community and it could go either way and if you 
make an investment in that community, sometimes a community 
that is heading towards becoming a distressed community can be 
saved. 

Mr. Wise. Commissioner Dell, I believe you made that point. I 
represent a coxmty that shares some of your problems in that ofii- 
cially it is listed as having extremely low unemplo5nnent. That is 
because the bulk of the county drives 30 to 50 miles over a State 
line to work in counties surrounding it. 

Unfortunately, by every indicator it ought to qualify for EDA ex- 
cept for that artificial distinction, low property tax base and low 
tax collection, although they're up to their maximum in what they 
can collect, but they have not qualified in the past for EDA or ARC 
funds. So there sometimes can be distortions in that. 

Mr. Dell. I certainly am not going to suggest that we shouldn't 
help the poverty stricken areas. However, EDA funds may not be 
appropriate because some of those areas are not appropriate to 
drive industry into them. Industries won't locate for certain rea- 
sons. 

So I think you have to evaluate just where are you getting the 
most for the dollar and maybe there are other programs that would 
do a better job in those poverty areas. They need help and I would 
be the first to do whatever we could for those areas. But because 
of the fact that maybe some industries or — there is nothing there 
to really attract industries in some of those areas, I think. So for 
putting funds there for that purpose, they may be wasted. 

Mr. Wise. Mr. Koos? 

Mr. Koos. If you have a growth center potential, regardless of 
whether they fall under the EDA criteria jurisdiction, it would be 
very well to look at its inclusion if it can have a positive effect. If 
I remember the initial concept of EDA was the pebble in the water 
with the outgoing rings of influence and sometimes you do penalize 
by not following this. Probably we are looking at the more rural 
areas where I work most of the time but I think this is something 
that you should consider; that perhaps you would look at even if 
they didn't have all the criteria but had the potential to provide the 
main means to provide the jobs. Rural as we are, we have commu- 
nity patterns that you wouldn't believe. One plant employs from 12 
counties and some of the commutes are 50 to 60 miles a day each 
way. 

Mr. Wise. I thank the witnesses. 



259 

Mr. Koos, I also appreciate your attachments and specific rec- 
ommendations on what could be in the reauthorization bill. And 
several of you have other attachments as well. 

Ms. Molinari. 

Ms. Molinari. Thank you. I have a few quick questions and I 
want to thank this panel and the panel before, for putting together 
what was probably the most instructive sessions that I have sat in 
Congress relative to the ideas and perspectives that you have 
brought to us. You gave us the real details of these programs. 

Mr. Marinucci, let me start with you first. In your testimony you 
talked a lot about some of the problems germane to the urban 
£ireas relative to dealing with infi-astructure in areas that need 
cleanup and peripheral work before the actual work can be done. 
You stated that EDA is one of the most effective tools that can be 
used in enterprise zones to leverage investment. 

Could you go into a little more detail as to how your vision takes 
you to that point? 

Mr. Marinucci. I think we would look again at the flexibility 
that EDA provides for direct infi-astructure fimding. As you know, 
most of the enterprise zone discussions have not provided that di- 
rect investment opportunity, at least to date. There is obviously in 
some of the empowerment zone discussions talk of a different level 
of financing or ftinding being available to an enterprise zone. 

But in distressed areas not only do you have the challenge of an 
aged infrastructure, but you also have the compoimded challenge 
of land that in many ways is not developable because of demolition 
costs that may be associated or assembly costs with that particular 
land and when you couple the environmental contamination that in 
many ways is much more prevalent in urban settings, you have a 
cost basis that has to be overcome in addition to the infi-astructure. 

So when you look at the economic factors of getting a company 
to move to a particular location, you have to address those ftm- 
damental needs before that inner city location becomes viable. 

Ms. Molinari. So you see the EDA has the primary factor and 
then enterprise zones can come into play. And in some of those 
areas where enterprise zones are not attractive, through the assist- 
ance of the EDA you could bring them up? 

Mr. Marinucci. I think that EDA can provide the infrastructure 
funding that is needed to match the investment. But all we are 
talking about is creating the land mass that becomes economically 
viable for the companies to move in and then the enterprise zone 
can act as an incentive for that business decision. 

Ms. Molinari. I appreciate that. 

Rabbi Shmidman, your model is obviously extremely effective in 
New York City. You have worked in all the boroughs with your 
model and we are appreciative of that. If we were to take your 
model and use it as a national model, can it be used effectively in 
a rural setting or do you see any impediments? 

Rabbi Shmidman. I think if you took this model and put one in 
every congressional district and you took the budget for a business 
outlet center for a year, for approximately $43 million you would 
be making one of the most fantastic contributions to the entre- 
preneurial opportunities and to visions within a community. Be- 
cause this is the kind of model, besides what it does in specific eco- 



260 

nomic development, it teaches people how to access variety of serv- 
ices. 

We did not desire to reinvent the wheel. We have merely taken 
the various spokes and created the cap around it so that people- 
and in addition to that what most people need is someone to hold 
them by the hand and take them through the process and follow 
up for them. You will get someone who is interested in a particular 
marketing strategy, you will take them to a university or college, 
small business development center, but no one is going to follow up 
with them. It is only the BOC person or the BOC staff that will 
follow up as to what happened in that interview and how did they 
follow up on the advice that was given to them. You could get a 
bargain at $43 million. 

Ms. MOLINARI. Do you make the determination as to whether an 
applicant qualifies or not or do you just accept all applicants and 
walk them through the process? 

Rabbi Shmidman. There is no specific prerequirements. Anyone 
that comes in. They come in for a variety of different services. 
Someone who is looking for a start-up loan or marketing advice. 

For example, we advise people in New York City the housing au- 
thority has procurement opportunities. People never realized that 
the procurement opportunities exist on the city. State and Federal 
level for the small entrepreneur. People produce products and serv- 
ices that could be utilized on a governmental fashion but they don't 
know how to get at it and, therefore, everyone thinks always it's 
the large business corporations. 

And we also lose focus — ^people get all excited, you talk about a 
major corporation that employs 2,000 people; and if you think that 
is going to leave, it becomes a disaster for the entire city and they 
throw them all kinds of bonuses and you forget that maybe 100 
businesses are emplojdng the same number of people and they are 
threatened and if they go away, what happens? They provide the 
economic stability for our neighborhood. 

It is these small businesses that provide the support system for 
our neighborhood both in terms of nonprofit institutions, cultural 
values, brotherhood relationships; that which makes up our civih- 
zation. And it is only through these kinds of models that you in- 
crease, in addition to the specific aspects of your program, you cre- 
ate that kind of stability and all of the benefits that endure 
throughout the Nation. 

Ms. MOLINARI. So that basically is the way you see the role of 
the BOC relative to job creation and retention is dealing with the 
small businesses that may need a little financial assistance or as- 
sistance relative to application procedures? 

Rabbi Shmidman. You have the person who is interested in going 
into business and then you have those that have already started 
some business and will fail unless they receive the kind of support 
services that this kind of network can provide for them and that 
is what the BOC network is really geared to do. 

Ms. MOLINARI. I appreciate that. 

Ms. Carin. I would also like to add, what Rabbi Shmidman men- 
tioned we should formalize linkage agreements with the State, Fed- 
eral and other services. We bring our staff to meet the staff of all 
the other agencies and we are educated and it is part of the linkage 



261 

agreement that their responsibility is to educate us in their re- 
quirements and application procedures. 

And we prescreen applicants so that when we bring a client to 
an existing service, the chances are their service procedure will be 
appropriate and won't be asking us to take them to the next door 
down the hall. And if our clients try two or three places, they aren't 
going to keep trying. It is a one shot deal. 

And in addition to that, it is not helping to fill out forms that 
we do. Once a client is comfortable with us and they trust us, then 
we can introduce new technologies to them, introduce concepts 
about work force development. And really they are open to new 
ideas that they wouldn't have come to us in the first place and 
wouldn't have even thought of implements. 

Ms. MOLINARI. I appreciate that. It sounds very helpful. 

Mr. Wise. Well, I want to thank all of you. And RaJDbi 
Shmidman, it was good talking about cultural differences going 
from New York City to Greenbrier county. But happily it has 
worked out well for IsraTech in both areas. And to all of you, I 
want to thank you for the time you have taken. The subcommittee 
will be considering this and probably asking you for additional in- 
formation. We look forward to work other with you in the future. 
I declare this hearing adjourned. 

[Whereupon, at 1:30 p.m., the subcommittee was adjourned.] 



PREPARED STATEMENTS SUBMITTED BY 
WITNESSES 



STATEMENT OF THE 

HONORABLE DONALD DELL, PRESIDENT 

CARROLL COUNTY, MARYLAND BOARD OF 

COMMISSIONERS 

ON REAUTHORIZATION OF THE 
ECONOMIC DEVELOPMENT ADMINISTRATION 
AND THE 
APPALACHIAN REGIONAL COMMISSION 
(H.R. 2442) 



BEFORE THE 
ECONOMIC DEVELOPMENT SUBCOMMITTEE OF THE 
COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION 
U^. HOUSE OF REPRESENTATIVES 



ON BEHALF OF THE 
NATIONAL ASSOCIATION OF COUNTIES 

JUNE 24, 1993 
WASHINGTON, D.C. 



(263) 



264 



GOOD MORNING MR. CHAIRMAN AND MEMBERS OF THE 
ECONOMIC DEVELOPMENT SUBCOMMITTEE. I AM DONALD DELL, 
PRESIDENT OF THE CARROLL COUNTY, MARYLAND BOARD OF 
COMMISSIONERS. I AM TESTIFYING ON BEHALF OF THE NATIONAL 
ASSOQATION OF COUNTIES (NACo)* AND AS A MEMBER OF NACo'S 
AGRICULTURE AND RURAL AFFAIRS STEERING COMMITTEE 

OFnClALS FROM THE NATION'S 3,045 COUNTY GOVERNMENTS 
THANK YOU FOR YOUR LEADERSHIP IN CONVENING THIS HEARING 
ON H.R. 2442, LEGISLATION REAUTHORIZING THE ECONOMIC 
DEVELOPMENT ADMINISTRATION (EDA) AND THE APPALACHIAN 
REGIONAL COMMISSION (ARC). WE ARE OPTIMISTIC THAT THIS 
LEGISLATION WILL BE ENACTED, BECAUSE THE PRESIDENT SUPPORTS 
THESE CRITICAL DEVELOPMENT TOOLS THAT CONGRESS HAS KEPT 
ALIVE THROUGH THE APPROPRIATIONS PROCESS SINCE THEIR 
AUTHORIZATION EXPIRED IN 1982. 

RR. 2442 RECOGNIZES THE FUNDAMENTAL NEED TO RESTORE A 
FEDERAL-LOCAL GOVERNMENT PARTNERSHIP IN ORDER TO ACHIEVE 
LONG-TERM ECONOMIC RECOVERY, UNDERTAKE PUBLIC WORKS 
PROJECTS, CREATE JOBS, HELP DOMESTIC BUSINESSES COMPETE IN A 
WORLDWIDE MARKETPLACE, AND ASSIST COUNTIES UNDERGO 
ECONOMIC CONVERSION IN RESPONSE TO THE NEED TO DIVERSIFY 
RURAL ECONOMIES, THE CLOSING OF MILITARY BASES AND OTHER 
FACTORS IMPACnNG LCKIAL ECONOMIES. 

EDA AND ARC ARE AS CRITICALLY NEEDED NOW AS WHEN 
THEY WERE FIRST AUTHORIZED. PRIOR TO THE CURRENT 
RECESSION, URBAN, SUBURBAN AND RURAL COUNTIES ALREADY 
WERE HAVING TO COPE WITH INCREASING DEMANDS FOR SERVICES 
AND DWINDUNG FEDERAL RESOURCES WITH WHICH TO RESPOND. 

COUNTIES* MAJOR SOURCE OF NEW REVENUES HAS COME 
FROM THEIR OWN HNANONG. IN HSCAL 1989-90, COUNTY-IMPOSED 
TAXES YIELDED $48.7 BILLION OR 36.7 PERCENT OF COUNTY 
GOVERNMENT REVENUE. THE PROPERTY TAX IS THE PRIMARY 
SOURCE, ACCOUNTING FOR 73.3 PERCENT OF ALL COUNTY IMPOSED 
TAXES IN 1989-90. WHILE REVENUE FROM COUNTY OWN SOURCES 
INCREASED BY 57.8 PERCENT BETWEEN 1979-80 AND 1989-90, REVENUE 



* The National Association of Counties is the only national organization representing 
county government in the United States. Through its membership urban, suburban and 
rural counties join together to build effective, responsive county govcmmcnL The goals of 
the organization are to: improve county government; serve as the national spokesman for 
county government; serve as a liaison between the nation's counties and other levels of 
government; and achieve public understanding of the role of counties in the federal system. 



265 



FROM OTHER GOVERNMENTS INCREASED BY ONLY 7.1 PERCENT 
DURING THAT TEN YEAR PERIOD. 

HOWEVER, COUNTY REVENUES ARE NOT INEXHAUSTIBLE. 
MOST COUNTIES FACE LEGAL LIMITATIONS ON THEIR ABILITY TO 
RAISE PROPERTY TAXES, AND MANY LOCAL OFFICIALS MUST 
CONTEND WITH ORGANIZED RESISTANCE TO THESE INCREASES. IN 
ADDITION, COUNTIES ARE GRAPPLING WITH A WAVE OF UNFUNDED 
FEDERAL AND STATE MANDATES WHICH NEFFHER RESPECF BUDGET 
CONSTRAINTS NOR THE ARDUOUS TASK OF FUNDING COMPETING 
PRIORfTIES. 

THE ECONOMIC RECESSION AGGRAVATED THE IMBALANCE 
BETWEEN REVENUES AND EXPENDITURES. EARLIER THIS YEAR, 
NACo, THE NATIONAL ASSOCIATION OF TOWNS AND TOWNSHIPS 
AND THE NATIONAL ASSOCIATION OF DEVELOPMENT 
ORGANIZATIONS RELEASED A SURVEY THAT WAS SENT TO 1,050 
RURAL LOCAL GOVERNMENT OFHCIALS AND DEVELOPMENTS 
ORGANIZATIONS, WITH 330 RESPONDING. I REQUEST THAT A COPY 
OF THIS SURVEY BE ENTERED INTO THE RECORD. 

53 PERCENT OF THE RESPONDENTS INDICATED THAT THEIR 
GOVERNMENTS HAD BEEN FORCED TO REDUCE FUNDING FOR 
INFRASTRUCTURE PROJECTS. OF THESE, 40 PERCENT POSTPONED 
ROAD AND OTHER TRANSPORTATION IMPROVEMENTS. 41 PERCENT 
INDICATED THAT THEIR LOCALITY HAD RAISED TAXES OR FEES. 

TO ADDRESS THE ECONOMIC SLUMP IN RURAL AMERICA, 70 
PERCENT OF THE OFFICIALS SAID THAT IMPROVING 
INFRASTRUCTURE IS THE NUMBER ONE PRIORITY. 47 PERCENT 
IDENTIFIED ECONOMIC DEVELOPMENT AS THE SECOND PRIORITY. 
SOLID WASTE MANAGEMENT WAS THE THIRD MOST FREQUENTLY 
IDENTIHED NEED, AT 18 PERCENT. 

THE nSCAL PICTURE ALSO IS GLOOMY IN LARGE, URBAN 
COUNTIES. THEY HAD TO CUT PROGRAMS, RAISE TAXES AND DEFER 
CAPITAL PROJECTS. IN A NACo SURVEY THIS YEAR OF 66 OF THE 
LARGEST COUNTIES, LOCAL REVENUES AND FEDERAL AND STATE 
AID ARE DOWN AND EXPENDITURES ARE HIGHER THAN PROJECTED. 
FACED WITH THESE CHALLENGES, URBAN COUNTIES USE A VARIETY 
OF METHODS TO BALANCE THEIR BUDGETS: RAISE TAXES AND FEES, 
SPEND RESERVE FUNDS, AND CUT PROGRAMS, SERVICES AND 
EMPLOYEES. TWO OF EVERY FIVE URBAN COUNTIES (39 PERCENT) 
REPORTED THEY HAD TO IMPLEMENT ALL OF THESE MEASURES. 
MORE THAN 80 PERCENT INCREASED TAXES OR FEES AND 70 PERCENT 
HAD TO MAKE STAFF REDUCTIONS. LOOKING AHEAD, 75 PERCENT 



266 



SAID THEY ARE LIKELY TO INCREASE REVENUES IN THE NEXT 12 
MONTHS. 

MR- CHAIRMAN, I ASK THAT THIS SURVEY ALSO BE ENTERED 
INTO THE RECORD. IT IS AN UPDATE OF A SURVEY DONE LAST YEAR 
OF 80 URBAN COUNTIES WITH SIMILAR FINDINGS: 78 PERCENT HAD 
TO REDUCE SERVICES AND/OR EMPLOYEES TO OFFSET LOWER 
REVENUES AND 55 PERCENT REPORTED DELAYING CAPITAL PROJECTS 
AS THE PRIMARY SPENDING REDUCTION MEASURE 

IN DISTRESSED COUNTIES - URBAN, SUBURBAN AND RURAL - 
DEVELOPING AND MAINTAINING THE INFRASTRUCTURE IS 
CRITICAL FOR ECONOMIC DEVELOPMENT. RURAL ECONOMIC 
DEVELOPMENT WILL BE HAMPERED, IF NOT PRECLUDED UNLESS THE 
INFRASTRUCTURE IS UPGRADED. MORE THAN HALF OF THE 
NATION'S 3.1 MILLION MILES OF RURAL ROADS ARE UNPAVED AND 
MUCH OF THE PAVED PORTIONS ARE IN POOR SHAPE SEVENTY HVE 
PERCENT OF OUR COUNTY BRIDGES NEED REHABILITATION. 180,000 
BRIDGES ARE DEFICIENT ACCORDING TO THE FEDERAL HIGHWAY 
ADMINISTRATION. 

SINCE THE DEREGULATION OF MANY TRANSPORTATION 
MODES - AIRLINES, BUSES AND RAILROADS - RURAL ROADS AND 
BRIDGES ARE OFTEN THE ONLY TRANSPORTATION NETWORK IN 
RURAL AREAS. AS A RESULT, THOSE ROADS AND BRIDGES ARE 
BEING CALLED UPON TO HANDLE GREATER AMOUNTS OF 
COMMERCIAL TRAFHC THAN THEY WERE DESIGNED TO HANDLE 

MR. CHAIRMAN, A NATIONAL CHALLENGE REQUIRES A 
NATIONAL RESPONSE EDA IS EFFECTIVELY USED TO ADDRESS SOME 
OF THE INFRASTRUCTURE NEEDS IN DISTRESSED AREAS. THIS 
PROVIDES THE FOUNDATION FOR BUSINESS GROWTH AND 
EXPANSION WHICH, IN TURN, WILL ENABLE COMPANIES TO ENGAGE 
COMPETITIVELY IN INTERNATIONAL TRADE WHICH IS THE FASTEST 
GROWING SECTOR OF OUR ECONOMY. PASSAGE OF H.R. 2442 WILL BE 
A LIFELINE FOR THE ECONOMIC HEALTH OF THE NATION. 

IMPROVING THE NATION'S INFRASTRUCTURE IS JUST ONE OF 
THE CRITICAL NEEDS THAT H.IL 2442 ADDRESSES. THE NATIONAL 
ASSOCIATION OF COUNTIES APPLAUDS THE EMPHASIS THIS 
LEGISLATION GIVES TO PLANNING A UNIFIED STRATEGY FOR 
ECONOMIC DEVELOPMENT. STRATEGIC PLANNING WILL HELP 
MOBILIZE A COMMUNITY, PROVIDE A FOCUS FOR ALLOCATING 
SCARCE RESOURCES AND ESTABLISH MEASURABLE OBJECTIVES. AS 
PART OF THIS EFFORT, A THOROUGH ASSESSMENT OF COMMUNITY 
ASSETS, INCLUDING NATURAL RESOURCES, WORKFORCE, 



267 



INFRASTRUCTURE AND QUALIFY OF LIFE MUST BE DONE. COUNTY 
OFFICIALS RECOGNIZE THAT OTHER LOCAL GOVERNMENTS AND THE 
PRIVATE SECTOR MUST BE CONSULTED IN FORMULATING ECONOMIC 
DEVELOPMENT PLANS. 

STRATEGIC PLANNING IS CRITICAL FOR COMMUNITIES THAT 
ARE UNDERGOING ECONOMIC CONVERSION. CLOSING MILITARY 
BASES PRESENT SUCH A CHALLENGE. THE ADVERSE ECONOMIC 
IMPACTS CAN BE DEVASTATING FOR SMALL OR RURAL 
COMMUNITIES AND METROPOLITAN AREAS. BASE ACTIVITIES 
OFTEN PLAY A DOMINANT ROLE IN LOCAL AND REGIONAL 
ECONOMIES. MANY COMMUNITIES HAVE WITNESSED THE 
DEPARTURE OF TEN TO 30 PERCENT OF THEIR POPULATION AS A 
RESULT OF A BASE CLOSURE IN ADDITION TO JOB LOSS, THESE 
JURISDICTIONS MUST CONTEND WITH AN ERODING TAX BASE, 
INCREASED COSTS TO LOCAL GOVERNMENTS, SUBSTANDARD 
BUILDINGS AND INFRASTRUCTURE, DECLINING REAL ESTATE 
VALUES AND ADVERSE IMPACTS ON LOCAL BANKS. 

EDA PROVIDES INVALUABLE RESOURCES WITH WHICH 
AFFECTED AREAS CAN UNDERTAKE REUSE PLANNING. LOCAL 
GOVERNMENTS SHOULD BE PERMITTED TO USE EDA FUNDS FOR 
LOCAL PRIORITIES, INCLUDING MAKING LOANS OR GRANTS TO 
BUSINESSES THAT UTILIZE FORMER BASES. THE NATIONAL 
ASSOaATION OF COUNTIES URGES THAT ANY LOAN REPAYMENTS 
UNDER SUCH A SCHEME GO INTO A REVOLVING LOAN ACCOUNT 
FOR USE BY LOCAL GOVERNMENTS IN FINANCING ADDITIONAL 
CONVERSION ACnVITIES. 

RETENTION AND CREATION OF INNOVATIVE BUSINESSES ARE 
CRITICAL COMPONENTS OF ECONOMIC REVITALIZATION. HOWEVER, 
ACCESS TO CAPITAL OFTEN IS RESTRICTED IN DISTRESSED AREAS. 
EDA REVOLVING LOANS LEVERAGE PRIVATE SECTOR INVESTMENT. 
A 10 - 20 PERCENT PARTIQPATION BY A REVOLVING LOAN FUND CAN 
BE A DETERMINING FACTOR IN WHETHER OR NOT A BUSINESS 
QUALIFIES FOR PRIVATE FINANCING. MANY FINANCIAL 
INSTITUTIONS ONLY MAKE LOANS FOR BUILDINGS AND TO ACQUIRE 
EQUIPMENT. IN THESE INSTANCES, EDA REVOLVING LOAN FUNDS 
CAN COVER SHORT TERM OPERATING EXPENSES DURING THE 
START-UP OF A NEW BUSINESS. 

ALTHOUGH MY REMARKS HAVE ADDRESSED CONDITIONS IN 
DISTRESSED COUNTIES GENERALLY, I DO NOT WANT TO OVERLOOK 
PARTICULARLY CHALLENGING CONDITIONS IN COUNTIES NOW 
SERVED BY THE APPALACHLAN REGIONAL COMMISSION. THESE ARE 
AMONG THE POOREST COUNTIES, WITH VERY LOW PER CAPITA 



268 



INCOMES AND EDUCATIONAL LEVELS. THE NATIONAL ASSOCIATION 
OF COUNTIES SUPPORTS THE COMPREHENSIVE APPROACH OF ARC IN 
ADDRESSING INFRASTRUCTURE IMPROVEMENTS AND HUMAN 
RESOURCE DEVELOPMENT. 

IN CONCLUSION, MR. CHAIRMAN, THE NATION'S COUNTY 
OFHOALS WHOLEHEARTEDLY SUPPORT REAUTHORIZATION OF EDA 
AND ARC. INCREASED ASSISTANCE FOR PUBLIC WORKS AND 
ECONOMIC CONVERSION ARE KEY COMPONENTS OF A NATIONAL, 
COMPREHENSIVE STRATEGY TO ACHIEVE ECONOMIC RECOVERY. FOR 
THESE REASONS, THE NATIONAL ASSOCL^TION OF COUNTIES URGES 
PROMPT PASSAGE OF H.R. 2442, 



269 
ExEcimvE Summary 

Rural Ameiica: Wortk tbt InvtAmcat 

Time uaodadoas* bcve joined tofether to hifhligiu die oeedi of nml cidzeai tad urfe the Pieadem 
ud CoQgreu to "Invm ia Rural America" u part of loy fiederal initiative to lotve the natioa't eco- 
oomic probiema. Leaden o( die dtree froupt said dieir "»»«*|p wai "doo't for|et die 62 tmiii<<^ Ameh- 
cana who live ia aoa-metiapoiiiaa (ml) America aa yon develop a aew ' irm r mr policy in die fint 100 
days." 

In reapoose to a survey at lOSO runl eleccd officials and repooal development orpnizations, 70 
perceai of tbe 331 rr ip onrtin g said that infrasauctuc ia their mmber ooe concetn; 47 percent said 
WTWom i f devdopmeai and 18 perceai listed solid waste and odier eaviraaiiMatal issoea. 

When asked far a list ofitadyno-to" in frismicnw pRqecti diat could be tuderway in 90 days, the 
rani oOIcials idcntifWd 2M2 ptoj^ea reqoiiiag S2.9 biUiaa d public iavanmu and creanng 39.068 
jobs. 

Whea aakad lo ideatify die greatest impedimeats in using federal piugiauit . nearly half (44 perceu) of 
die local o<Hciab dted infteribiHiy , eacesaivc pap er wuk tad wd tape. Ow half (S3 poecat) taid dieir 
guweiiuaeati had beea farced ■> reduce nnirting rar luAasuucsve prcQecti aad 41 pewcui had taisad 
lauaorfiBes. 

Aooonliag id U. S. Ccasa dan: 

la 1991 iha povcRy ma ia rval veas was UgiMr (16.1 poceat) ttaa ia ortaa 
legiaaa (13.7 paraaai) 
• A UgharpencBBifBof chikktaaad ibadderty iarartl anas an poorer tfaaa in 

Tte tBeapkiyaieat ma it Ugbcr ia aoaHKOapottiaa pA peocat) ihaa bkod- 
poliBB (&6p0BaaiO 

Rml coaBtiea« wwaa Md mteaal daweitipiBeai otjMimkiM aMda ifae ftifliywiag rBWwiwiwKlatKiBS to 
vffligiTW aad PRaiocoi'^lact GHbbk 

1. " No fcdwil Iwr Of mrinfajB ihowld be caactad wiifaout aiir<m>aByiag fuada. 

2. AdMoaal Mail fkadafthoold be provided ftariafrasOQcaBtiadudiag loads, 
hd^p^wMir aMMaiifi aad aolid waae dtpoaaL 

3. Ttei^rinBHtftar local oaatdtthoald be waived for dflreasedccoBBauiiea. 

4. Kari fOvaoHBOMiAoald be allowed mm flaidbiHqria maedagfBdefal naa- 
dMH Md cdfliag Manl propana should be ooodaaied 10 oiakB beaer oae of 

■vdaUeliiidi. 
1 Priority ftedbifiiaraisdBf federal nnlpropaaaaifaoald be aiflHdti job cre- 
Hko. job Biiaiag, eoooooic devclopeaeBi. iBCbakal aaiiitaaee aad iaoeasiBg 
capial te maO boiiaeat developmenL 

•The National Asaociadoe of Cooaiies (NACo). Nadooal Asaodatioa afDevelopiaent Opnizations 
(NADO) aad die Naoooal Aaaociatioo of Towns and Townships (NATaT) represeot local governments 
aad dieir itgiooal developoeni orgaaizaiioos tbiougbout nml Amoica. 



73-118 0-93-11 



270 



NACo URBAN COUNTY FISCAL SURVEY: 
Executive Summary 

^OUNTBS 



Scope of Survey 

• HACo reoeady nrveyed 66 line ariMn comuies ■boot tfadr fiscal aniation 

• TofBdier these counties represent 82.6 millioa dtixens, or one-tfaiid of the natian's popalatiaa. 



$10 Billion of Unftuided Capital Projecti 

• The mtaan comwics ironed a peat-op demand of mifnnrird capital projects, valued at $10 billion, in 
nnineroas areas, iacfaidiiig toads and Inlfles, ho^itals, jails, seweiB. boosing pnjecti. coma. Ubraiies. 
aodpvks. 



RcTcnoe and Ezpcndttnre Projections 

• Almoat 2 of evoy 3 cooaties (6S.2%) g eneimd lower diaa fsrimaiwl owa-soorce leveaoes, or 
reveaoes that fflwinnfiS levy diiouly. 

• More diaa half (SU%) of die surveyed coontles repotted that fiscal assistance from odier gowennieais 
was lower than prcyecteiL 

« More diaa half (5 U%) of die surveyed cooaties uporteddiateipcndimrea were higher dianprc>iected. 

• Overall, mote dian 4 of evciy 5 cooaties (83 J%) leponed diat pngectiaiis weie off tBget ia at least 
ooe area — own-suuue le venue. i"iT' g* ""' """* "*** aid or ciipciidiiuteat mare ibib a (jiisiiu Q7 J%) of 
Mtveyed counties tepotied that ifaeir|au|e<.ikiii were off ia an three categopes. 



Budget Balancing Me 

• Siaoe oooaties are required by fakw to balaaoe dieir bodgeis, die most coaBBoa measae itt^Ieoaented by 
cooaties was iacreasiag r eve aues; more dum 4 of evciy 5 cooaties (81.8%) laised a ddition al revenues, 
valued at nne diaa $1.9 bOttan. 

.MorediaBTofevay 10 ooondes (71.2%) used reserve fnads to help balance dieir budgets. 

• MoR diaa 3ofevciy 4 caaMka (77 J%) cut pngivBS aad aetvioes 10 help offiet dwir budget 
unbalances. 

• More diaa 7 cfeveiy 10 oooades (71.2%) reduced dieir wackfotoe o get dteir bodgets back on orgeL 

• Overall, almoit every C00B9 (98J%) repotted diat diey had to impleaient at least one measure: almost 
2 of every S cooBiiea (39.4%) repotted diat all foor measoies were necestaiy to balance dieir budgets. 



Future Outlook 

• Almost 3 ofevety 4 counties (74.2%) reported diatdiey expect having ionise additi on al revenues in 

die next year. 

• Almost half (43.5%) of die suveyed counties expea diat diey wiU use reseive fimds. 

• Morediaa7ofeveiy 10 counties (71.2%) anticipate diat diey will have to cut programs and services in 

die oomiag year. 

• Three of eveiy S counties (60.6%) eiqiect to reduce dieir woricfarce over die next year. 

TlUtmM ^iiilrtni nfrniiltii • 44IFbalSb«t.N.W. • Wt^lm0am,OJC 20M1 • JU/M342M 



271 



NACo URBAN COUNTY FISCAL SURVEY: 

Executive Summary 

■^<V«>yio« Febmarr 1993 

^OUNTTES 



Scope of Survey 

• NACo recently surveyed 66 large urban counties about ifaeir fiscal situatioa. 

• Together these counties represent 82.6 million citizens, or one-third of the nation's population. 

$10 Billion ofUnAinded Capital Projects 

• The urban counties reported a pent-up demand of unfunded capital projects, valued at $10 billion, in 
numerous areas, including roads and bridges, hospitals, jails, sewers, housing projects, courts, libraries, 
and parks. 



Revenue and Expoidlture Projections 

• Almost 2 of every 3 counties (6S.2%) generated lower than estimated own-source revenues, or 
revenues that counties levy directly. 

• More than half (51.5%) of the surveyed counties reported that fiscal assistance fiom other governments 
was lower than projected. 

• More than half (51.5%) of the surveyed counties reported that expenditures were higher than projected. 

• Overall, more than 4 of every 5 counties (83.3%) reported that projections were ofif target in at least 
one area — own-source revenue, intergovernmental aid or expenditures; mare than a quarter (27.3%) of 
surveyed counties repotted that their projectiotis were off in all three categories. 



Budget Balancing Measures 

• Since counties are required by law to balance their budgets, the most common measure implemented by 
counnes was increasing revenues; more than 4 of every 5 counties (81.8%) raised additional revenues, 
valued at more than $1.9 billion. 

•More than 7 of every 10 counties (7 1.2%) used reserve funds to help balance their budgets. 

• Mote than 3of every 4 counties (77 J%) cut prograoB and services to he^ oCEset their budget 
unbalances. 

• Mere than 7 of every 10 counties (71.2%) reduced their worlcforce to get their budgets back on target 

• Overall, almost every county (98.5%) reported that they had to implement at least one measure; almost 
2 of every 5 counties (39.4%) repotted that all four measures were necessary to balance their budgets. 



Future Outlook 

• Alnx>st 3 of every 4 counties (74.2%) reported that they expect having to raise additional revenues in 
the next year. 

• Almost half (45 J%) of the surveyed counties expect that they will use reserve funds. 

• More than 7 of every 10 counties (71.2%) anticipate that diey will have to cut programs and services in 
the coming year. 

• Three of every 5 counties (60.6%) expect to reduce their workforce over the next year. 

NatioiiyAModatiMorCoutiM • 440 FInt Street, N.W. • WatUattOB. D.C 20001 • 202/393-42K 



272 



NACo URBAN COUNTY FISCAL SURVEY: 

An Examination of the Fiscal Health 

of 66 of the Nation's Largest Counties 

February 1993 



One year igo. ttte Nadooal Associadoa of Coun- 
ties (NACo) released a survey that investigated the 
fiscal condition of 80 of the nation's most populous 
counties. The study found that more than duee- 
founfas of these counties had to either make reduc- 
tioos in services or cut dieir woricforce, or both, to 
help ofEset dieir budget itnhiii»nr.»« 

The cunent survey is an attempt to deteimine how 
the nation's largest counties aie faiing in today's eco- 
nomic climate. Specifically, the survey examines 
whether these counties have met their budget targets, 
todiffyeaimcoioaUsarerequiredbylawtobaiance 
their budgets, what steps those counties with budget 
gaps took to Wng tfaeir budgets back on target. 

NACo surveyed 72 large urban counties be- 
tween November 1992 and January 1993. Sixty-six, 
or 92 percent, of the counties sampled responded. 
Together, these counties tepiesent 82.6 million citi- 
zens, or one-third of die nation's populatioa 

Revenue and Expenditure Projections 

Counties must estimate revenues and expenditures 
to develop dieir budgets. These prqjecticnsaie based 
on a number of assunqitians, including property as- 
sessment values, the state of the economy, growth and 
devdopment, citizen aixl community needs, and fixl- 
eral and stale legislatiao, among otheis. AMiough 
most counties tudget oonseivatively during peiiods of 
economic <tagn«tinii many of the wban counties that 
NACo surveyed still fouid their budget projecncns off 
target 

Own-Source Revenues 

Almost 2 of every 3 counties (63.2%) were caught 
with k>wer than estimaind levels of own-source rev- 
enues, or revenues that counties levy direcdy, such as 
taxes and fees. Almost all counties (90.7%) diat le- 
poited own-source revenue deficiencies stated that 
taxes were below projections. More dian two-dnids 
(69.8%) of the counties diat repotted lower levels of 



CapitalFtoJccts 

When adUMf about pen<&ig capltid projects for 
whkb Amding doc* not cxbt, the arfaan counties 
reported projects vdued at an estiinatcd $10 bflfioo. 
Hie Est of unftmded capital projects coTcrs a wide 
range of infrastructure areas. 

Most of the urban counties rqwrted that road 
and Inldge oonstnictiao and repairs hare been de- 
layed due to nudequatefkinds. Other fransportatioa 
need% sudi as airport and parking tw^itH*^ ^gre 
also fisted by counties. The urban counties also 
conmionly reported the need for Amding in the area 
of crimJbal justice fiidBties, sucb as poBce station^ 
jails and juvenile detentionradSties^roraisiclabara* 
toriea^ and court facilities;, PubBc safety fitdlities, 
induding(&«stationsand emergency operationsceu- 
ters, have abo been deflmred by counties. 

Coundesfrcquentiyreportedabaddogorcapital 
IMVjects in the area of healtb and human services. 
Examples indide hospitals, kmg-tenn care fodl^es, 
pubfic healtb cfinics, human services CKililies, and 
housing prttjects. C>>unties that provide education 
services freqpiently reported tbe need for sdiool facil- 
ity rqnirs and renovatioas. 

Ilw urban counties also firquently reported that 
additional fiindingfor such vitalprcifects as drainage 
systems, aoGd waste facilities, and water systems a 
needed. Finally, many counties reported that they 
are ttaving <£nkulty in ftmding projects required by 
the federally mandated Americans With Disabilities 
Act (ADA). 

This pent-up demand of capital projects b the 
result of their discretionary nature; capitii projects 
are often the first expenditure items that govern- 
ments cut vben faced with Ow need to redikx spend- 
ing. This was borne out by the current survey: More 
counties reported cutting capital projects than any 
other program or service. Infact, this wasfound to be 
the case hi two previous NACo fiscal surveys that 
examined smaO and large counties aHke. Thus, as 
counties continue to delay replacing aiui repairing 
their inft-astructure, the bacUog and the costs of 
these essential projects continue to cfimb. 



NatiooalAModatiaaorCautic* • 440 FirA Street. N.W. • WiQfciqftaa. D.C. 20001 • 202/393-(22< 



273 



own-souice levenies lepcnted that fees far savioes were bek)w proieoioiis. Tfa^ 
sognu ecanomy bwaed the amount of kxally raised tevenue anticipated by counties. 

Intergovernmental Aid 

Because inany services provxled by counties aie lequired by fBderal aixl state law, and because counties are often 
UmitBd in their aiitliority to kivy taxes and fees by the stale, a poition of counties' irvenues conK &om other governments. 
McR than half (SI .5%) of the uttan counties, however, lepotted that intergovernmental aid was lower tlian projected. 
BecaiMe die federal go ve uuu ent has drastically cut aid to local governments over the last decade, and, as a consequence, 
counties have become kss leUant CO federal grants, only 1 of eveiy S counties (20.6%) diat iqMned leceiving lower 
levels of intergovernmental assistance stated diat federal finds were below projections. However, almost aD (94.1%) 
of the counties that teponed receiving lower levels of intergovernmental revenue stated that they received less state aid 
Ifaan anticipated. Thus, counties have felt die impact of the tiickle-down effect: In response to its huge budget 
deficit, die federal government has reduced the amount of fiscal assistance to state and local governments, and, in 
tum, many states have cut assistance to local governments as diey grapple with their own fiscal crises. 

Expem&turts 

Although many of the urtnn ootnties 
were caught with shan&Os on die revenue 
side ofdieirbudgetL more dianhalf(SU%) 
found that expenditures were higher than 
they had projected. With crime inaeasing in 
uttan aieas, it is not suiprising that two- 
thirds (67.6%) of the counties diat heed 
higher levels (tf spending reponed that ex- 
penditures in die areas of public safety, 
couns and conectioas — pnmary trywi- 
bilities of counties — were beyond projec- 
tions. Although counties' responsibilities for 
delivering human services vary by state, 
many of the counties that provide such scr- 
vinrt n-pn« tw< high»»r ttinn panjwriwri «pm<ting nn these jMiigmni . Forexanplcoflfae 14 States fiomdiesanqilewfaere 
miwriM he^ (iad general jm'w m^ prognuB ( p rog rams thtt provide benefits to low-incoiiie people who do not 
<ji«K<y fnr my fr^mA ffkiM m K) , h«lf nf the cmnrie* that eipain iced eqgndilme ovetiuns iqwBed diat general 
imBu nc p <»»iw w™'h'g>**than prnj eoed. Of the 10 Aattsfianthesanqdewterecountieshe^fimdAFDC programs, 
2 of every 5 (41.7%) icported higher dup an t ici p at e d levels of AFDCeqiendinjes. 



PBtCENT OF COUNTIES WITH 
INACCURATE BUDGET PROJECTIONS 




Overview 

Overall, more dian 4 of every 5 counties (83 J%) lepoited diat in at least one area— own-source revenues, 
tntergovemmentalaidarexpenditures — dieirprojectioas were off target Equally significant, more dianl of every 
4 counties (27J%)iepoited diat dieir budget projections in all duee areas were off. Only 1 of every 6 counties 
(16.7%) repotted diat dieir projections were on target in all duee areas. 



Budget-Balandng Measures 

Since counties must legally balance dieir budgets, diey must take measures to ofEset any mid-year budget gap 
as a result of inaccurate pnijecdoas. The primary measures taken by counties inchide increasing revenues, dipping 
into reserve fimds, cutting programs and services, and reducing the workforce. Althougji some cotimies repotted 
relatively accurate projections, dicy were only able to keep dieir budgets balanced by making die decision to take 
one or more budget measures duiing the budget preparation process, not after facing a tnid-yeaT budget shottfalL 

2 National Association of Counties 



274 



Kevemie litcnates 

Tlieiniitt c ouMMcbudget^tilincinKineMuieiqwBedbycouiitiMwisincicitiiig i eve ni^ MaRtlun4of 
rifry T rwitini (81 8%) nhr^ mAAitimmi mwmiM>« m h»ip irw^ thrir hii<<gii«« h«i«iw*iH Of tfae coontiet ifaai 
inaeaied revalues. 72^ peroem levied additioiul user fea anl M^ percett raised tajwi: 41^ 
The 48 uibin counties that provided dollar figures repofted ifaat d>ey generated $1.9 billico &otn new i^^ 

Reserve Fimdt 

Resene finds are nnplus leveiiues canied over fiiim one fiscal year to tfae iKXL IIk majority of counties idied 
oaieserve fiinds to help ofita ilieir budget iinlnlanoes; inoR dao 7 of every 10 counties (71.2) leparted diat ifaey had 
nuKiudt funds. 



Reduaioitt m Prog r am s atdServket 

Service rednctiaas were also a canunoa measure taken by die uiban counties: mote dian 3 of every 4 counties 
(773%) cut programs or services to keep their budgets on target, B waui c count if t are often bound by federal and 
aate law to provide cenain services, these service itductions couU only be made oo disoetiiiaaiy programs. 
Gmdes made leductioas most 6e«iuemly in tfae area of capital projects; more dian half (S6. 1 %) of all surveyed 
cooaiesGUtiheirpublic works budget Despite tfae increase in erime in urban areas and the ftctdiat many counties 
found diat spending oo critrnnal justice servkxs to be higher dian projected, nuny counties repotted diat they were 
still fiotced to make cuts in this area. Because criminal justice p rog m m are ofandiscretiooary. 43.9 percent of 
an counties cut their budgets for judicial and legal services. 40.9 percent reduced public safety programs, and 27 J 
percent cut correction s p r og r a ms. Many coun iin a l io m ade r t d act ioi i s in disoetkioary human service s p ro gr ams; 
43i> percent of all counties cut health and hospital services and 36.4 percent reduced public welfare programs. 
Coutties also fiequently teporied cutting back on "quality-of-life' services; specifically 43.9 percent cut parks and 
recreation programs, and 34.8 percent reduced library services. 

Wortfarce ReduaUms 

RnaUy, die majority of surveyed ooiB- 
ties reported that workforce reductions 
were necessary to help maintain a bal- 
aaoed budget More than 7 of every 10 
counties (71.2%) ledooed dieir em^oy- 
meiit levels, ciifaer by layoffii. early tetiie- 
mett or aiuition. Together, these ooud- 
ties tfrtiiccd Ibeir workfoioe by 22.690 
(nO-iiiiie employees. Of these counties. 1 
of every 4 (2SJ%) repotted having to cut 
their workforce by S pcrctni or greater. 

Overview 

Ovenn. atant every county (98J%) 
wpun e j that ifaey had ID ii i 4)lcj i m at least 

one budget-balacing measure 10 achieve a balanced budget Equally at ti g nifi t aw t.ahao«t 2 of every 5 counties 
(39.4%) tepoiiBd dat an foff measures were necesaty to get dnr budgets back oo track. 



PERCENT OP COUNHES THAT TOOK BUDGET-«ALANCING 
MEASUtBS DUUNG THE LAST YEAB 




Future Outlook 

Hie fiscal siiustiao for counties is not expected to get much beaerii die ooming year. For many counties, die 
aaaesaneis cyde (orieal property is gradual (e.g., property assessments are made every dnee yean), and. dierefiate. 

National AssocUttioHi^ Counties 3 



275 



PERCI3HT OF COlWriES THAT EXPECT TO TAKE BUDC 
BALANCING MEASURES DURING THE NEXT YEAS 



itie lecegion's impact on propeny ox ?ev- 
cnoe — the largest single revenue somce far 
moe counies — may not yet be fully real- 
izBd. In additico. many counties expea 
fintfaer cuts in state assistance as many 
states coitimje to face fiscal austerity. 

For these reasons, most surveyed 
counties reported that they expect to have 
to take one or more budget measures in 
the coming year. Almost tfaiee-quaiten 
042%) stated that they anticipate having 
to find additional revenues. Despite re- 
ports from a number of counties that their 
surphis funds are depleted, 45.5% stated 

that they anticipate having to draw down on reserve fimds. More than 7 of every 10 counties (71.2%) expect to 
have to cut programs and services. Rnally, 3 of every 5 counties (60.6%) stated that they anticipate having to 
reduce tfaeir wockforce. 




4 National Aaociaikm cfCowaUs 



276 



Rural 
America: 

Worth the Investment 



January 13,1993 



Rational J%T M W^^^ National 

— At «" J^" — /w.Am m m wM Association of 

Counties n— A«a«..fD«*,— o»-— Towns and Townships 

NACo, 440 Fint Siraec N W . Wuhingtoo. C 20001 (202) 393-6226 • NAOO. 444 N. Capitol Sttwi. N W . Suite 630. 
W«»huigtoo,DC 20001 (202)624-7806 • NATiT, 1 522 K Sowl. NW . Suite 600. Wtihiiwoii. DC 20005 (202)737-5200 



277 



TABLE OF CONTENTS 

L Executive Siuninary >~...^^ 1 

n. A Profile of Rural America . > . . .. > 2 

UL Surrey Summary ~ ~>_..>. 8 

IV. Qnotea from Survey Respondents ..... 10 

V. RccommeBdatlons . . . . . .. 12 

VL Description of Organizations ...... 13 



/ 278 

Executive Summary 

Rural AnKrica: Wortk the InvHtmcat 

Three m o ci eii oiM * hcve joined together to highliffat the oeeds of noil ddscas and urfe the Pieadeu 
and Coogreis to 'Invca in Rioal America" u pan of any fedeal iniiiaiive to utve ihe natioa's eco- 
oonicprohieaia. Leadanof the doaepoupa said dMirmeanfe was "(loa't forget the 62 miUioaAaieri- 
cau who live in noB-metrapoUtan Ctval) America u yoa develop a new doBiesiic policy in the fint 100 
days." 

In reipooM to a nrvcy of lOSO iwal eleciBd officiab and regioiial developiDeat arganizatioas. 70 
percent of the 33 1 reapooding aid that inftaaracoac is Aeir aomber one ooooem; 47 percent said 
fO OBomi c dev r i o p mem and 18 percent BswdiolMwasiB and other eavireamentali 



When asked for a list of "icady-ia-fo" infiasaociBR pnjeca that could be mdenny in 90 days, the 
nnl oOdals identified 2JS2 projects reqniiing $2.9 WlUoa of pBbUc iovcaBBent and creating 39^)68 
jobs. 



Wbea aakad to identify die ycatest impediments in aaiBg ftdeial pioftaaii, neariy half (44 pereent) of 
die local oOctals died inflexibility. exoesBvtpapermik and fsd tape. Over telf (S3 peroant) said their 
fovenmena bad been forced 10 redaoe finding for inftasBvcam projects sod 41 peeoeat bad laiaad 
maaorfoaa. 

AooonliBg tt U. S. Geasns datt: 

In 1991 te powany laae in lonl ataas was Ufhar (Mwl panaoi) than in inban 

regiaoa (13.7 paroant) 

A higher peneotafB of children and the ddetly in itnl anas SIC poorer dtan in 



Tna miHmhTyiuiMt mt is highrr in iiiiiiiia iimtirtlian (7 J) percent) than metn^ 
1(6.61 



Rml Onmtiea. *""— — " — gM*— l <i«M«l«|»ll»t >»y i»«i«w im«1» m« tlJnt<mA»^ rmtvtmtmttmttAmttnatm |q 

CoBgreas and PrcfldaBi-^lact Cbmok 

1. " W> nrfwil Iwr Of molilioB should be eaicBd widawi if rwnmiying ftindti 

2. AddMoaaHManlftading should be provided far infta simcture indiiding loads, 
tari^pik «Mv waMBwiMr and solid «asK diipoaaL 

3. Thtfiqrinmani far local match sboold be waived far dstreaaedcanminities. 

4. ihni go II —iif Ml should be alloaied mow fletJbJHiy in meedng federal aaan- 
da«i «d oiaiaf fcdcnl propios should be oDordbaied 10 make beoer ose of 
avalibleAiirii. 

5. Mori^Amdng far edsihigfadenl ml propaoM should be aimed SI job ere- 
adoo. job sainiBg, eooaoaic devclopoieni. tachakal asaisiHioe aad iaereasiiig 
capial far mMll busJiifss development 



• The Naiiooal Associaiioo of Counties (NACo). Natiooal Association of Development Oganixations 
(NAOO) and die Natiooal Association of Towns snd Townships (NATaT) icpreseot local govenmenu 
and dwir regional developaieni organizations duoughout nirsl America. 

I 



279 



A Profile of Rural America 

While the needs of urban areas are indisputably real, there has been virtually no discussion, 
cither during the campaign or since the election, of the needs of the nation's rural communities, 
especially the smaller ones which have extremely limited resources with which to help 
themselves. Rural communities have long been praised for the values that are instilled in their 
residents. But as the sutisdcs below tnake readily clear, niral life is not always the ideal which 
some images would suggest. According to the federal government's own suastics, many of the 
problems that urban leaders point to such as poverty, unemployment, access to jobs and 
infirastructure constniction and repair, are as bad, if not worse, in small communities and 
rural areas. 

Our nation is largely one of small communides, composed of cides, counties, towns, 
townships, villages and boroughs. Small local govemmenu are the vast majority of all local 
governments in the United Sutes. Eighty-six percent of all general purpose local govern- 
menu in the U.S. are under 10,000 in population, and half have fewer than 1,000 residents. 
Seventy-four percent of the nation's counties are under 50,000 in population. Though these 
smaller local governments have fewer resources at (heir disposal tlun major urban areas, they 
must still deliver many, if not all. of the same services to their residents that urban areas provide. 

Poverty and unemployment 

Poverty has come in recent decades to be considered an urban issue. However, since 1967, 
when rural and urban poverty data began being coOccted, rural areas have consistently 
had higher poverty rates than urban areas. In 1991. the poverty rate for persons living in 
nonmetropolitan areas was higher (16.1) than the poverty rate in metropolitan areas (13.7) (See 
chart #1 below). However, a more interesting measure might be a "worst-case" comparison 
between nonmetropolitan areas and central cides. Since 1987. central cities have had a higher 
poverty rate, but the two rates are close. 



Chart #1 



P>tfntbttow t h<po¥tftyl>vrtlnl99l 

40%r 




f%Mnsundar ISbaiowpowrtyln 1991 

90% 



40% 



30% 



»% 



10% 



Mack MapMic 




Hispanic 



However, when one looks at poverty by race, only whites have higher rates in central cities 
than in nonmetropolitan areas. Both blacics and Hispanics in nonmetro areas have higher 



280 



poverty rates than their central city counterparu. (See chart #1) 

Additionally, children (below age 18) in nonmetro areas are more likely to be below the 
poverty level than children in metropolitan areas. Moreover, poverty among black and 
Hispanic children from nonmetro areas is about the same as for black and Hispanic children from 
inner city areas. (Seechanil) 

Finally, elderly nonmetro residents are more likely to be poor than metro elderly. Almost 
half of elderly nonmetro blacks arc in poverty, compared with less than a third in central cities, 
while over a third of the Hispanic nonmetro elderly are below poverty, compared with a quaner 
of central city Hispanic elderly. (See chart #2) 

Chart #2 



Elderly below poverty In 1991 


Unemployment rate In 1991 


40% 
30% 
20% 




^ i 


12% 
9% 

•% 


^CrnMety ■ 

HMro iH. 




aBCantnlctty 
.J ^H Noninctro 


Ht, 


i 
1 


mJ 


Wttfl- 


10% 




3% 


aJB^ 


m 


° AUraoM WMta Black HIapanie 





AHraeaa WhNa Waek HIapanic 



Unemployment continues to be a problem in rural areas because of limited employment 
opportunities. The unemploTmcnt rate for all persons in the central city is only slightly 
higher than that for nonmctropoUtan Doafann workers. The unemployment rate for 
nonmetropolitan white wotkea not employed in fanning is higher than the rate for their central 
city counterparts. A comparison of the same rates for blacks and Ifispanics shows that there is 
only a slightly higher unemptoyment rate for central city persons. (See chan #2) 

Getting rund leddents out of poverty and into the woikforce poses special problems because 
of the educational tttainmeot and training of rural residents. Iliis issue was explored recently 
by the Economic Reieaich Service (ERS) of the U.S. Department of Agriculture. Interestingly, 
it found that a rani high school education is often superior to an uriMm education, based on 
achievement scores. ERS also found little difference between the typical metro and nonmetro 
worker 25 years of age or older who has a high school degree but not a college degree. 

However, rural workers were less likely to have finished high school, attended college, 
earned a bachelor's degree or earned a professional or graduate degree. While the rural-urban 
high school graduation gap has been decreasing recently among younger age groups, the college 
education gap has been increasing. This is in pan because younger and better (college) educated 
persons are leaving rural areas for career opportunities in urban areas. According to ERS. 



281 



counties in an area with greater than a million people grew by 1 2 percent between 1 980 and 1 990. 
In contrast, the snuUest nonmetropolitan counties — those not adjacent to a metro area and with 
no city with a population as big as 10,000, shrank by slightly less than one percent. 

The ERS research also showed that the more r\iral a community, the lower the educational 
attainment; in contrast, "inner city" counties (counties with large metropolitan areas) did not 
show a similar lack of educadonal attaiiunent Rural students are less "tracked" into advanced 
education paths, in pan because fewer rural high schools offer advanced placement courses. 

Fmally. the research also showed that while there was only a slight rxiral gap in job skills 
training, those who need training the most (the less educated) were less likely to receive post- 
high school job skills training. This was especially true for minorities. Rural companies are often 
limited in their ability to offer employee training because of their snudl size. V^ith job skills 
training an apparent priority for the Clinton Department of Labor, this disparity will hopefully 
be addressed. 

Infrastructure 

There is a great need to build or maintain infrastructure in rural areas. Without necessary 
infrastructure investment, rural development will be hampered, if not precluded. Since the 
deregulation of many transportation modes— airlines, buses and railroads — rural roads 
and bridges are often the only transportation network in rural areas. As a result, those roads 
and bridges are being called upon to handle greater amounts of commercial traffic that they 
weren't designed to handle, in addition to "nomul" trafRc such as travel to woilc and school or 
for public safety services. 

Rural areas contain 80 percent of the nation's bridges. By 1990. die nation's larger rural 
roads contained 76,395 deficient rural bridges out of more than 2SO,000 rural bridges. Smaller 
"local" roads had another 103,000 deficient bridges. Overall, roughly 40 percent of 463,000 
rural bridges are deficient 

Not only are rural bridges in poor repair, so are rural roads which constitute 3.1 million of the 
nation's 3.9 mlUkm mDes of road. Almost tbiee-foanhs of dwse roads aie under local control. 
More than half of aD rural fnkafe is unpaved, u one would expect because of the large number 
of collector and local n»dt under local jurisdiction. Many coUKtorroads and most local roads 
arc ineligibit Ibr fcdtrai tnuiaportation fiinding . The nation's best system of roads, the 
intersute higbmqr sjrstem, only runs through a third of die nation's nonmetropolitan counties, 
adding to the iaolalion of t«al areas. 

Of particular i m po rtance to ratal communities is infrastructure needed to meet die growing 
number of laiiely unfunded federal environmental mandairt. IVpical are waste and water 
treatment facilities needed to make diinking water contaminant-free and treat wastewater that 
is discharged into lakes and streams. 

One study by die Center for Community Change notes diat Environmental Protection Agency 
(EPA) dau reveal that "75 percent of all documented [wastewater] facility needs are in rural 
communities of fewer than 10,000 persons." These facilities would come widi an estimated 



282 



S 1 3 billion pnce ug. roughly one founh of \* hai EPA estimates is needed nationally. The report 
goes on to note that because of the way funds are allocated, "states with significant rural needs 
will receive considenbly less federal SRF [State Revolving Fund] funding than sutes with 
higher-cost urban projects." Wastewater facilities in rural counties — and especially poor rural 
counties — were foond to account for most of the backlog of secondary treatment facilities 
needed to meet Gean Water Act standards: the highest incidence of noncompliance with 
discharge permit standards; and die largest share of noncompliaitce situations requiring new 
facilities where none now exist 

A major barrier widi regard to wastewater projects in rural areas is that poor communities 
cannot develop affofdaUe projects because they cannot achieve the economies of scale 
necessary to result in reasonable customer rates. Too much cost is spread over too few customers. 
The proMem of high per capiu con projecu is not oniisttal for Tunl projects. Oneof the most 
glaring examples is rural drinking water systems. The EPA has csdiuted that for some snuU 
drinking water systems to meet federal drinldiig water standard!, the cost will exceed 
$1,S00 per housdwld aimuaOy. 

These are just a few areas where federal policy should be reexamined and refocused to ensure 
diat residentt of Rural America are not left behind by the new administration as it pursues policies 
to increase itifrastnicture investment, create jobs and protect die env ir on m ent 

Then are many ottier areas where rural local goven u nents and dieir citizens are in as great a 
need as urban residents for proactive federal assistance: acceu to medical facilities, physiciaiu 
and afiFordable health care plans; creaiioa of more affordable and better qoality housing; 
improvement in rural te l e co m muni ca tions infrastmcture: and relief from burdensome federal 
regulatiom which create a di sp r o p o r ti onate amouu of adm inis native costs on local govern- 
ments, especially smaller ones. 

As the Clinton adminiswuion moves ahead to ttet the challenges of governing diis nanon. 

aHminUtftinn pnli<7 maktn ilmnM aiiMiig tti t ti|fyl r^WnPPUnittfS Mil ttlf IT ftlftftfd ftffvrials STf 

able to compete for funding wiifa ifaeir oriMn cogntefpHO on a level play fiekl. and diat federal 
programs and regulatiotts are not continued in an inflexible "one-size-fits-all" format in which 
all die nation's 39J0O0 local govcmmenis are considered alike. 



283 



NAXX3 RURAL DEVELOPMEhfT AND DELATED f>OMi5fl<! tUbofef ANALYSIS ■ 1993 gUDCE 




(kiilioM o/ D3Eir 



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B»aJITMENT (5F AffllMULTUllE 



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284 



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285 



SUMMARY SURVEY OF RURAL OmCIALS 

Runl officiils ne faced with a number of issues relating to budget cuts, reducdons in service and how to 
impixive infrutrucoiit ai well as sdmulate job growth in their communities. In arecent survey rural officials 
were asked a number of qtiestioos relanng to the above issues. 

NACo. NADO. and NATaT sent out a local of 1 .030 surveyi to local goveronmt and regional development 
officials. The joint return was 331. a response rate of 32 percent 

Infrasirvicture conoenu were the top priority cited in die survey. Of diose icspooding, 70 percent said that 
infrastructure was the number one coocem. The definidooofinCrastrucnire included roads and bridges, water 
and wastewater systems, u well as capital facilities such u schools, jails, and municipal buildings. 

A second priority was fimnoinic development, identified by 47 percent of those responding. Local officials 
were ooacenwd with creating or expanding the ecoiKxiiic base of their cosnuniiies, creating new and better 
paying job opportunides, busness recruitment and financing concema. u well as capital for rural community 
and eoooomic development. 

The third iDOMfiequendy identified priority for luilfijweniiDeat officials wuMlid waste inanageiiKnL Of 
dioae responding. 18 pereem were coocemed with solid waste and other enviiaime&tal issues. 

Impdtliiifula 

The survey aiked kxal ftyvcnuiieitt and devdopiDeu leaden 10 identify (lie fitaiest in^ediii^ 
their tovenuncno in i mp l rmmtin g federal pwgiai iia. tim gH»«i»«t jmprMtnmnt utwitiftxi Wy aa p»>n»t.t nf 
itott trspnnding. wai "Yed tape" and the inflnrihlf naaga of tederal programa. Local officials complained 
dtat federal programa requiitd eioesaive artminioiaiive dmiea and no much paperworlt (23 percent). 
mmpliraiBd unptoufntation pnxwltirea, and are ovenegulated . 

An aAKtirmmi buden placed on twal officials is the lack of capiial for planning and trrhniral assistance. 
Many fiedefal p rogr ams leiiuire a level of foading and irrtmiral eapenise not always available to local 

«f ftyis|f 

Local and legiaaal "^w^*'* cted the lack of comminicadoo among fedenl agencies, and among federal 
afeaciesandnaMaDdlocalfovenHDenaucausing an excessive bmdea. AlsomeatioDedu an impediment 
was die lack ofcoMiiKDcy aamg federal agencies in interpredng regulatioos. 

Flonadal StabOKy 

OCdaia were asked how tfaeir|ovaninena responded to lednctioos in federal and laie funding. Toofbet 
dieaecadMcki, 41 percent said dwirgavenuDents were Coroedttiaise taxes andAir fees. An addidonal 33 
pereem said d>eirtovcnimenBtiiade redactions in capital proaecB. Ofdieae. 40 percent postponed road and 
other mnsportatioo improveoMnts, while 27 percent put off pnks and recteatioo projects. 

OfBdals were w^"^ to identify whst holds the greatest potential for job creatioo in dwir communities. A 
numberofsuggestiotu were made by local government and developtnent officials, iiKluding: small business 
developuKnt, tourism, oaanuftciuring and industrial development, and new forestry and agricultural 
coooepis, such u value-added products. 



286 



iti l^kmifh m«ny rff^^rimVt KttmA « mimhcr of pioieco thcv wottld like to lec implenienied mrim ii U t e job ind 
ecooooiic growth, tiw lack of capital wu cited u a hudnnce to canyuig out these effcns. 

The responses of iiKM surveys was twimed up by a statetnent made by a local official from Punilico G>unty. 
North CaroUna: "The unavailability of capital for infrastructure projects, such u sewage treannent and 
^^.pn^i tysems, has gready hmiicd job creatioo in our county. Also the soringent requiiemenu of the 
regulatory aceanes at die federal and state levels have limited our atrilities to attract industries.' 



287 



QUOTES FROM SURVEY RESPONDENTS 

If nnl oooaiks had food icboob and t table indusoial bue. we could tegiomaiely offer Amencins a 
life-ttyle ihM is haahKkr dun life in nuuor meaopoliiaii ucas.* 

•Hun Blodfeo. AsriauK Ooomy Maufer. lUiCn OooBty, Nonh CaroUu. 

-Runl couadcs oeed 10 divcnify and expand dmr eoooaoBk bue » provide jota in low-ooat livinf 
■«aa.beninaocnienforcaviRiainenialindimyarieniBdbiiaineaaea. Coodnue » be die 'safety net* 
for die underprivikfBd. ifloprovc die ((oaliiy of Ufit in ov coaaaamidca.' 

•Rcafan Wilaoo. CUef Esacndve Ofliocr, Sonialaas Coonqr. Califamia. 

In ay optoioo. tu dollara ihoiild be adminincwd u ne» » Ae aouwe u poaabla. Much nore can be 
m ■ «iMi|ji«fcat» i4«fc ibwer dollan.' 

•Dale Wcakcner. Judfa, Boooe Goomy. Aifcaaaa. 

•Aaaia— Ulborineaainaaadooof joba;aniiPMceon wplac— iMofaaiMiDgiafca i w i ci Mc and 
devatopoHBi of new innaioucuv to aerve cxpadnnf popnlaDOB basiat laduuiuB in haafah can coaB! 
uadoBal diiokwio tot the a co Bo oiy i cowniM iadoo o» ppaaa^r and adnli adn r a iiiwi p wyani a to Bain Ae 
wannHoa* 

•LyanOwadia,ftaaMaucf the Board of CoMUySiiparfiaon.PBnaaiCb—y.Miiaitappi 

ItmlAflaaricaisteaMnibanfinBland. AUMaghnOingwaMe of gniadaaBiaaiedK popular 
paroapcion of iwral HIb, noB-ayicahaw jobacumiriuWparBantof randeiUdoyuiBui. EvenosCuuly 
*^iniiti tiO peiMM of dM total inrBint is froai noB-nm aouoaa. 

-Robart J. FKiooco. Exacodve Diiaciar. Mid^Baai Gbaodasian. WasUngioa. Nordi Cvoiina. 



The coal of taplameadaf EPA landards for pobUc heflUaa-aaaw. «MBr. laadfiD. eie^-is often 
bayo^teimchofowHidhrcanBunidaa. ByoaeBplyii««tt*aBPAittBladaasearbciliiy 
opgndas Md Mor OBvimaaMri Maaea, no Aods nnaia ftam dMk Hoiiad bndptt te oihcr coo- 
aotty naada aHh « Mv Mksd bdUnp. foada. aod froBr*4riaaiad pRqaca for acoBoeoic devtlop- 

-Joaaph I. HMii«, Baacarivo Dfaocior. RcpoMl IV Dridopntai Aaaodadaa. Twin Falls. 



jtoMiMB. ApnUaai«a«iuuditadBUMla^tealoealf0««BasatMaeoeaiheu 

Mnl taadi^ MMoai. aari if MO or aoR Menl Aiadtav nama ■• ariHad. ten is oAm a lack of 
cearitatfoateMaaaAckpnpndaadliaasMdavartofAiada. Itejrdneadaaa} lack of local staff 
MdAaknUactec^adiyvfcapoadisBadiad. IaadAiae.icfiaadde«dapaieatorpniiadon 
nffny ba ^Me B provide tte necessary Bchnical aaaisaaee IB local (ovaruaeats doc o resources 

aoibaiaf safllcicaL' 

•ItOMld J. lUdil. Entwdvc Dincw. Wesi Cttoal Nebmka Devtlopnent District. Ogal^ 

Nebraska 



288 



"Fedenl funds have lo muy sninp taacbed and hoop* to jump tfarough that I doubt we would ever 
applytfain. We htv« no buiiiiesje* because we have no lewerage." 

<:itherine UmcM. C3eA. Town of Belgium. Ozaukee County. Wiscoonn. 

■^e need die opportiniiy»p«ikdpa«e In fedefalprogriBMaa a anaU town with imaU project*. Our 
taxe* went up by 71 peicott to cover debt necessary to fund a Bate road in our township, purchase a 

grader and enlarge our buildings.' 

-Jack Waller. Supenriaor. Athens Township. BndfoRl County, Pennsylvania. 
-Rural government can help d>e cooniy gready by setting an example or how people can work together 
regardless of dieir political afflliatioa.* 

<:yBdiia Young, desk. Town of Mny, WasUngw County, kflnnesott. 



i-^-fr:-'- --*-.: 



289 



RECOMMENDATIONS 

1. No fadgml tow or icguUiifla ifaouid be enicied or imptaneaad without MMmuy anyiin ftinrf* 

2. Theaumberooepriariiy oeed in rani America is invtsonau in tnfiumicnire. 

• Rondf and bridges were identified in the aovey by local governmentt u being 
their moei impottant priority. Coogreu should fiilly fund the Inteimodal Surface 
Tfinsponaiioa Efficiency Act (ISTEAX 

• Envinxunental inftasnucture — water, wastewater, solid waste — was the largest 
need. Congreu should ftilly fund progiaiiissimed at water quality, safe drinking 
waier. and solid waste disposal 

3. Coogreu and die Adumustratioa must reoognixe the diveniiy in raral America. Rursl 
oomnuinities need flexible programs and legulatiaos which can be sdapied to (heir own unique 

• Local elected oflldals should be a key panaer ia dw development and 
""l'*t"'*"****"" /» fawgi^i progruni. 

• CaagicM should caact flexible pragnms that allow implementing sfleades to 
adapt legulatioas to address die divenity in ratal areas. 

• The Adminismiioo should enforce (he RegnlatocyFkxifaility Act of 1980 which 
reqaiies Federal Ageades to develop flexible app r oach es (tar aoull local 
gowcmnents (ifaoae uoder SOfiOO popnlaiiniu) to meet fedenl goals. 

GaadmK siVpoR for Ae Nattooal InUadvc oo Rml DevdopmenL 

I. Monty AadiBf of exiadaf fsdenlprogritiisiBfetednnnlareusliouklbesiiiiedatjob 

imtil"' mil Tf— «**>». j"*» wriiriwgj uwt anruMMnie iW w Bkyiiiwit prngrMM. 

• nit Ilia iBGfenkal itrf "^ mist be provided Cor dioae small communities 
wfett 4o aot have te ttaources or expatiae to share equally in the benefits of 

I Cor nnl ABcrica. 



Ltak job cmdaa wftfc an edacaiioaal and Job Biiaiaf laaiegy » renin ratal 
ywk 

laoeaK ibe amooBt of capital and credit available Cor onall busnesses ia tural 



290 



DESCRIPTIONS OF ORGANIZATIONS 

The Nalloaal Aandadoa of Countlca (NACo) it the only nuioaal arganizahoo ihtt represents 
county govenuneat in the United States. NACo's gotis are to impiDve county government, an as a 
liaison with other kvela of govenunent. serve as the national tpokrvnan for countiea. and Mlvance 
public understanding of the role of counties. 

Nearly two-thindi at the county's 3.043 countiea are tn et nb ers of NACo. These counties range 
from urban Lot Angeles Couuy with a populatioo of more than 8 millioa to tiny Loving County, Texas, 
with a populatioo of 100. 

With headquanen oo Capitol Hill. NACo is a Aill-service organization that provides legislative 
representatioo, research, and technical and public afEuis atiittiixr 

Lany Naake. Ezecadve Diitctor (202-393-6226 exteuioo 201; Ralph Tabor, Legislative Direc- 
tor ExL 234; Richaid & Keister, Associate Legislative Directar. Exl 231; and Michael Sowell, NACo 
Fellow Exl 233. 

National Asaodatioa of Counties 
440 Fim Street. NW 
Washiagtoo. DC 20001 

The Natkul AiHttV— rfn— «ii>piiMiit nr ganfaathw (NADO) pnoioiet economi c devel- 
opneot ia Ameria't BMll dtica and mal aitas. Since ia fbniidiiig in 1967. NADO has been the 
naiioo't leading advocate far > refiooal ap proa ch to eooao mk developmeoL 

NADO t nembcn at repooal development organizatiaat that provide economic and community 
developmem »yi—*-'^ lo local fovcaments and the private aectcr. 

Thfi tt«""'<«« r'~*'*»*"''«'»«»<t*»pro frwin nalt and local elected officials to share infocina- 
noo about iiinovaiivt.pricikilipproacbea 10 ectaocnicdev tk ip mmt 

Alkeun WohUnck. Exccotivc Dbecur. Scoa D. Wh^iple. Lefiilative Analys at 
(202)624-7806l 

Natiooal AModMka ef Devdopmeat Orpaixaiiao's 
444 No* Qfilol Socet. NW; SnitB 630 
WaahiagHa. DC 20001 



The NatkHi Aaodatlaa oTTowM and Towaihipt (NATaT) U noD-proflt member organiza- 
tka offainf lecbakal tfrinaea. •dBcatkaal tendce* aiid piiblk polfcy ioppiat I) local govenmient 
oOdalafhrnnaRAMUjOOOnaaooaamDaiiksaeroMttiecoaatry. It wnfct to asast federal policy 
Bukm in iBidentaiiding the iBkiiie iieeds of snaU kKal giivaiiioeais aiid how to tfuctuc federal 

ioitiaiives » diey ut woricabte at the local kvcL 

fcfftcy R Schiff. Executivt Director. Tom Halkki. Diiwior of Fedend Afturi (202) 737-5200 

Natiooal Asaociaiiao of Towu Jt Townships 
1322 K Street, NW; Suite 600 
Washingtoo, DC 20003-1202 



291 



IMARC 



}j^ Nationai Association of Regional Coundis 



HAmcrnoonvsi 



wavn«coiriv 
iMKtiQan 
Cotfttiol 



rAincuncoi 

Movot. AMaumo. VA 

Nomwm Vagra PUC 

M«tieoo«an 

woHngtonCOG 



Santa PAJaCA 
SoxnxnCotoma 



£aet«K> oncnr 
lO.C 



OF 

DR. KENNETH GREEN 

EXECUTIVE DIRECTOR 

EASTERN PANHANDLE REGIONAL PLANNING AND 

DEVELOPMENT COUNCIL 

MARTINSBURG, WEST VIRGINIA 

BEFORE THE 

HOUSE PUBLIC WORKS SUBCOMMITTEE 

ON ECONOMIC DEVELOPMENT 

ON BEHALF OF 

THE NATIONAL ASSOCIATION OF 

REGIONAL COUNCILS 



JUNE 24, 1993 



1700 K 



N.W., 13th noor • VtfMMngcqn, O.C. ZOOOB • 202/4S7-0710 • FAX: 202/20O43S2 



292 



Good morning, Mr. Chairman and members of the Panel. We appreciate the opportunity 
to present some of our thoughts on the reauthorization of the Economic Development 
Administration and the Appalachian Regional Commission. My name is Dr. Kenneth Green, 
executive director of West Virginias Eastern Panhandle Regional Planning and Development 
Council, and president of the Executive Director's Committee of the state-wide West Virginia 
Association of Regional Planning and Development Councils. My council, and the other ten 
councils in the state operate as Economic Development Districts under the auspices of ARC 
programs. I am here today representing the National Association of Regional Councils, an 
organization that serves regional councils throughout the country. 

The brief expressions of support that I am making this morning are founded on my career 
involvement and academic understanding of the necessary conditions for successful and 
meaningful grass root economic and community development... citizens given a little bit of 
resources to become more resourceful, and to become active players in their own destinies for 
well-being. I started out this career in Congressman "Buz" Johnson's district, the Gold Country 
of California. As I am sure you are aware. Congressman Johnson, as chair of the Public Works 
Committee back then, is credited as the father of the 1965 Public Works Act. the Economic 
Development Administration and the EDA programs. 

The beliefs that I hold today regarding EDA are those which he conveyed to me as he 
relayed the intentions of Congress on this issue. Since those days, I went on to earn a Masters 
and Ph.D. in Rural Sociology-Community Development, and even with such tapestry, I could 
not fmd fault with those original intentions. 



293 



Within the next two weeks, NARC will have completed a survey of several economic 
development districts located in each EDA region regarding their use of EDA funding, with 
descriptions of activities that have been accomplished. That survey will be presented to 
members of this subcommittee, to members of the appropriate Senate subcommittee and other 
members of Congress. We expect the results of this survey to show that, despite its lack of 
support during the last 12 years and inadequate funding, EDA programs have been enormously 
beneficial to our rural regions. 

We are aware that the Administration is seeking a one-year reauthorization of EDA and 
ARC. For several reasons. NARC would like to see a two-year reauthorization of the programs 
at this time. 

First, a two year reauthorization would allow EDA to develop a mission statement for 
the agency that is relevant to the administration's programs to revitalize the nation's economy. 
Currently, no one has been appointed to head the agency, which hampers the development of 
any such roles. It could be several months more before there is an appointee. A two-year 
reauthorization would not put pressure on EDA regarding a well thought-out proposal on the re- 
orientation of the EDA program to meet the priorities of the Clinton Administration. 

Second, next year is an election year, which will add considerably to Congress' activities 
and work load and make it difficult to adequately address the long-term future of EDA. 

Third, EDA simply needs time to realize that it is no longer an agency under orders by 
the Administration to dismantle itself. It need to re-adjust and re-assess itself. 

The Clinton Administration has recognized the need for long-term planning, not only at 
the national and state levels, but at the regional level as well. It is only through planning that 



294 



our local communities can develop a strategy for growth, can cooperate with each other in 
finding the best solutions to their economic and community problems. These plans have served 
as a road map for our rural communities as they struggle, not just to survive, but to provide for 
their economic future, especially the generation of decent paying jobs for local residents. 

But EDA's planning funds have remained static for several years. The amount of money 
going back to economic development districts for planning has not kept pace with inflation and 
with the growing demands in the regions for economic development expertise. Lack of planning 
funds has not allowed us to develop new programs. The current $55,000 in planning funds 
barely covers the cost of keeping an economic development expert on staff and developing 
overall economic development plans, let alone allow for technical assistance to our individual 
local governments or to become involved in new economic development programs and to assist 
our local businesses with marketing strategies. 

Lack of adequate funds also means EDA has been unable to provide planning funds to 
34 regions that have met all the requirements and have already been designated as economic 
development districts. 

The Economic Development Administration and the Appalachian Regional Commission 
are the only agencies in the federal government that understand, appreciate and have the 
expertise to develop realistic strategies to bring economic revitalization to our nation's most 
economically stressed regions. It is only logical that EDA be given a lead role in working with 
other federal agencies to develop a strategic approach to problems that have plagued our rural 
areas for a number of years, including the integration of the newly proposed Empowerment 
Zones and Enterprise Communities. 



295 



Thank you for the opportunity to appear here today. If the National Association of 
Regional Councils, here in Washington, and we regional councils that serve as local development 
districts and designated economic development districts can be of any help, please let us know. 
We stand ready to support a new and expanded role for the Economic Oevelopment 
Administration and the continued outstanding work of the Appalachian Regional Commission. 



296 



PWEDA 

the PUBLIC WORKS and ECONOMIC DEVELOPMENT ASSOCIATION 

CAPITOL HILL OFFICE BLDG., SUITE 60, 412 FIRST ST. S.E. WASHINGTON, DC 20003 



STATEMENT 

O F 

PHIL X008 
PRESIDENT 

BEFORE THE 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 

COMMITTEE ON PUBLIC WORKS AMD TRANSPORTATION 

U.S. HOUSE OF REPRESENTATIVES 

JUNE 24, 1993 



297 



I want to thank you Mr. Chairman and members of this Committee for 
inviting me, as a practitioner in EDA, ARC and other federal, state 
and local and private programs in economic development for almost 
3 years to express some of my thoughts and observations on the 
subject of economic development and re-authorizing legislation for 
the Economic Development Administration. 

My name is Philip D. Koos from Towanda, Pennsylvania and I am 
currently Chief Executive Officer of the Van Emmons, Sr. Population 
and Marketing Analysis Center. Our mission is to provide 
affordable services that give the small and mid-sized business the 
same opportunities that the larger companies and corporations 
already have. I previously served for 16 years as the Executive 
Director of the Northern Tier Regional Planning and Development 
Commission, a five county Economic Development District (EDA 
funded) and Local Development District (ARC funded) , in northern 
Pennsylvania. My initial experience with EDA occurred in 1966 in 
Georgia where we became the third regional group designated as an 
EDD. Over the years I have also been involved with EDA programs at 
the Georgia Institute of Technology. Indeed, I have used and/ or 
observed every one of EDA's programs. They have all been positive 
and very effective in meeting the needs to create jobs. 

This agency has the necessary and essential basic programs already 
in place and, with adjustments to meet the current situation, (as 
well as with additions to some of those programs that have been 
introduced over the years) , this agency can, in fact, become the 



/ 298 



economic stimulator and continued leader for both rural and urban 
needs now and in the future. It can be the focal point, center 
piece, and catalyst for economic program delivery. It has: 

1) The OEDP* process which involves local government, the 
private sector and general citizenry or grass roots. 

2) Business loans (direct and guarantee) . See attachment A. 

3) Grants for infrastructure. 

4) Impact funds through defense. EDA has always played a 
key role in economic disasters due to cultural or 
physical phenomena. 

5) Specific research (both implementable and academic) on a 
wide variety of necessary and pertinent subjects. 

6) Technical assistance programs that provide professional 
staff positions in the Economic Development Districts. 

While we must not duplicate activities, we must also encourage and 
use in a positive way programs among agencies that compliment each 
other by taking into consideration the best methods of local 
implementation, considering local philosophies, etc. (HUD may not 
be successful in a more rural area while FmHA (RDA) may not be 
successful in a more urban area) . While EDA has excellent and 
effective programs, yet at times another agency may, for various 
reasons, be a better lead agency such as is the case with the 
current Defense Conversion Program. Here, process change rather 
than program shift may be the truly needed change. An example of 
such a complementary process in action is the 
•Overall Economic Development Program. 



299 



Westfield Tanning Company (Attachment B) . 

Another area that can be improved is a more expeditious review 
process with quicker decisions and turn around time. In 1976, 
EDA was able to process and approve approximately 2,062 projects 
for $2 billion from the time applications were received in late 
October, 1976 until early February, 1977 when the last projects 
were approved. For LPW II, local governments were notified in June 
and July, 1977 what their 'targets' would be. Between July 21 and 
September 30, 1977, EDA approved 8,554 grants totalling $4 billion. 

One of the keys to the ability to process such a volume was a 
reliance on self certifications. Of significance should be the 
very few problems associated with the process. With over 10,500 
approved projects, there was virtually no controversy, claims of 
fraud and abuse, etc. (Attachment C presents PWEDA views on the 
majority of EDA's program elements). 

The loan programs existing (revolving, direct, guarantee) and any 
future new ones should compliment other programs such as the Small 
Business Administration. EDA and SBA serve a specific category of 
businesses (type and size) and each does it quite well. Small 
businesses have their own unique problems while mid-sized and large 
businesses have theirs. Thus each loan program should be 
authorized to continue to do the fine jobs they do. 

Finally, the combining of agencies on individual projects such as 
co-use of EDA and ARC, cannot be given enough accolades for their 



300 



large number of successes over the years. These two agencies, in 
particular, have made not only the basic infrastructure a reality 
but they have gone beyond that in those next steps so necessary for 
job creation. They also provide for the necessary educational, 
research, and other social and physical opportunities necessary 
that guarantee maximizing of opportunities accrual for the economic 
well being of each constituent in the area. 



EDA, after nearly twelve years of struggling to survive repeated 
funding and personnel cuts, now needs to be revisited and re- 
examined by Members of Congress, especially of this subcommittee, 
the new Administration, and even EDA's many new employees need to 
observe its past successes and then consider its revitalization in 
a new and positive manner. True, the agency was created back in 
1965; but, while times have changed, economic development needs 
have not. In fact, we recommend that EDA become primary Federal 
agency with economic development responsibilities. EDA's enabling 
legislation is quite flexible. If the agency obtains strong 
leadership and develops an innovative approach, it can easily carry 
the responsibility as the lead agency for Federal economic 
development efforts. EDA can, and has in the past, worked with 
other Federal agencies such as HUD, FmHa-RDA, EPA, DOE, and FEMA to 
accomplish economic development objectives and relieve economic 
distress. Given its past record of achievement, Mr. Chairman, we 
think EDA, working with ARC and other agencies, can, with proper 
funding, leadership and staffing, be the centerpiece of a national 
economic development program. 



301 



In the interests of time, Mr. Chairman, we have included our 
recommendations on re-authorizing legislation as attachments to 
this statement. I will be pleased to answer any questions you may 
have. Thank you. 



302 



ATTACHMENT "A" 



303 



ATTACHMENT "A" 
PWEDA 

Itic FUBUC WORKS ud ECONOMIC DEVELOPMENT ASSOCIATION 

WEEKLY REPORT 

(202) 48g-l937 Dcconbcr 29. 1982 A. David Rally 

I fgiiblivc Advisor 

EDA '8 LOAN PROGRAM EXAMINED 

During that part of the recent Hearings on EDA's programs that 
dealt with the loan portfolio sale several reference's were made to 
the Alexander Grant Report as justification for the loan sale. 
That Report, which was commissioned by the Commerce Department and 
was dated September 11, 1981, purported to show that 4 0% of EDA's 
Loan Portfolio "reflect distress, ranging from serious delinquency 
to a liquidation in process". At the time, PWEDA became concerned 
because some newspapers published articles based on the Report 
which were severely critical of EDA's loan program. Accordingly. 
in our November 13. 1981 Weekly Report we analyzed and rebutted the 
Alexander Grant Report. In view of the persistent use of that 
Report by EDA officials to justify their efforts to eliminate the 
business loan program, we felt it would be timely to reissue our 
rebuttal in an effort to again clarify the situation. 

COMMENTS ON THE ALEXANDER GRANT COMPANY'S 

"ANALYSIS OF EDA LOAN" PORTFOLIO 

AS OF JUNE 30, 1981 

The Washington Post of 10/11/81 and a number of other papers 
throughout the country ran a story about EDA headlined "Millions in 
Federal Loans Imperiled". The theme of the story was expressed by 
the Department of Commerce's Director of Public Affairs, Mary Nimo, 
who declared that EDA's Business Loan program was "about to lose 
half a billion dollars". In the same vein, other officials of the 
Department of Commerce maintained that about 40% of the $1 billion 
in loans made or guaranteed by EDA are "seriously delinquent or 
belly-up and the situation is expected to get worse before it gets 
better". The backup for these statements and others in the Post 
story is a 21 page report entitled "An Analysis of the EDA Loan 
Portfolio as of June 30, 1981", prepared by Alexander Grant and 
Company, consultants, given a grant by Commerce to do the study. 

The letter transmitting the report states that "It is expected 
that this report will be a working document for those associated 
with the program. Consequently", it continues, "it is deliberately 
brief and does not include explanatory material such as 
distinctions among the various EDA loan and loan guarantee 
programs." The absence of explanatory materials does raise many 
questions such as how the six criteria used to determine quality of 
the loans were developed. For example: why should loans 



304 



"delinquent less than 60 days, paying with regularity for the last 
year" be the basis for classifying such loans in a "serious 
delinquency" category. Also, no consideration is given to what 
extent the present state of the economy - high interest rates, 
inflation and increasing unemployment - is having on loan 
repayment, not only for EDA loans but for business loans in 
general. There are indications that some businesses with long-term 
loans at low interest rates either from Government or private banks 
have, on occasion, held back a monthly payment to sue it for 
working capital, thereby avoiding having to take a working capital 
loan at twice the interest rate. Also, no consideration is given 
to the cash repayments that have been made to the EDA, ARA and 
Trade Adjustment loans in the Alexander Grant analysis. All the 
Grant Report does, in effect, is to tally the liquidations without 
allowing for the return realized from the liquidation plus forecast 
future losses based upon criteria that have not as yet been fully 
explained or justified. 

In short, if you choose to judge a portfolio of loans, as did 
the Alexander Grant Company, by the outstanding balance as of a 
certain date - say June 30, 1981 - AND you forecast future loan 
losses on the basis of criteria that classify loans which are 
delinquent for less than 60 days or more than 60 days but which 
have been current for the past years as "seriously distressed 
loans", AND do all this without taking into consideration the cash 
repayments on back principal and interest, THEN you may be assured 
your results will exaggerate losses and invite the kind of excesses 
expressed by Ms. Nimmo and other Commerce officials in the 
Washington Post article cited earlier. 

To illustrate the limitations and inaccuracies of the 
Alexander Grant Company Analysis, we turn to a simple analysis of 
EDA, ARA, and Trade Adjustment cash repayments, charge-off s, CPC 
expenses and guarantees honored from the beginning of each program 
to June 30, 1981. The analysis of EDA, ARA, and Trade Adjustment 
loans covers the "TOTAL OF THE LIFE OF THE PROGRAM." These figures 
were drawn from tables prepared by EDA's Accounting Division as of 
July 28, 1981. The tables are titled: I. Schedule by Program for 
Charge-off s, CPC (Collateral Protection and Care) , Expenses and 
Guarantees Honored for EDA, ARA, and Trade Adjustment respectively. 

SCHEDULE OF CASH 
(In Thousands) 

EDA ARA TRADE ADJ. 

Principal 157,210 97,883 11,868 

Interest 161.281 48.749 18.726 

Total 318,491 146,632 30,594 

% of Interest Earned 103% 

Interest earned is used to offset dollars charged off and CPC 
expenses. 



305 



Interest 161,281 48,749 18,726 

Dollars chgd off -67,567 -49,525 -21,630 

CPC Expenses - 2.745 525 z 3 

Int Balance 90,969 - 1,301 - 2,907 

Balance of Interest Earned (58%) used to offset Guarantees. 

Int Balance 90,969 - 1,301 - 2,907 
Guarantees 

Honored -51.181 -30.546 

Int Balance 39,788 - 1,301 -33,453 

Balance of Interest Earned 25% 

The interest earned (103%) on EDA's regular loans as of 6/30/81 was 
sufficient to cover all losses charged off plus the cost of all EDA 
guarantees honored. In addition, as shown below, EDA had a large 
enough balance remaining to cover the losses of ARA and the Trade 
Adjustment program. 

Int Balance 39,788 
ARA $ cgd off - 1,301 
Trade Adj $ chgd 
off - 2,907 

Trade Adj Guarantees 
Honored -30.546 

5,034 Balance of interest earned on EDA principal 
after offsetting all losses and guarantees for EDA loans, ARA 
loans, and Trade Adjustment loans. 

The above includes all EDA program activities, but not including 
the Steel Program which was a Presidential initiative with separate 
authorization by the congress. 

CONCLUSION 

In summary the maior points of this analysis are; 

1) The Alexander Grant Company Report is inaccurate and has a 
built-in negative bias. There fore, it is inadequate for future 
planning of EDA's Loan Program. If it prevails, it will, in all 
probability, lead to a proposal to contract out the handling of 
EDA's loan portfolio. 

2) This analysis shows the superiority of EDA's direct loan 
program. It has carried note only its own losses but those of the 
guarantee program*, as well as ARA and the Trade Adjustment 
Program. As the table shows, it was the interest ($161,281,000) 
earned on the principal of EDA alone that accomplished this. EDA's 
repayment of capital was never used: 



306 



The other maior achievement as shown-in-the-table-area; 

1) EDA's earned interest of $161,281,000 was 103% of its 
principal (157,210,000). 

2) After deducting EDA's losses of $70,312,000 from its earned 
interest it still had left $90,969,000 or earned interest of 58% of 
its principal. 

3) After EDA deducted the guarantees it honored from the 
remaining interest balance of $90,969,000 it still had a balance of 
$39,788,000, or earned interest of 25% of its principal. 

4) Finally, EDA had enough interest remaining, as the last part 
of the table shows, to pay off all losses and guarantee payments 
for both ARA and the Trade Adjustment Program, and still had a 
balance of $5,034,000. Thus, after paying off all losses the 
program showed a handsome profit to the taxpayer and that doesn't 
count the monetary value of all the jobs saved or created by the 
loans in the first place. 

*The Guarantee Program was not designed to be self-supporting, and 
the Trade Adjustment Program was only added to EDA's functions in 
recent years. 

P.S. Our information indicates that as of 1 October, 1982, the 

beginning of the "83 fiscal year" the accumulated principal 

and interest payments in the Economic Development Revolving 

Fund was over $200 million, with another $90 million 
anticipated during FY 83 



307 



ATTACHMENT 



308 



ATTACHMENT B 

WESTFIELD TANNING COMPANY, INC. 
Westfield, Tioga County, Pennsylvania 

FINANCIAL RESOURCES & USE STATEMENT 

Project Cost 

L/B $500,000 

M/E 160,000 

Renovations 185,000 

W/C 3.000.000 

TOTAL 3,845,000 

Source Use Amount 

Commonwealth Bank 

and Trust W/C $3,000,000 

EDA Guarantee L/B $1,870,000 (62%) 

Commonwealth Bank 

and Trust L/B $ 500,000 

Pennsylvania Capitol 

Loan Fund Renovations $ 185,000 

Revenue Bond and 

Mortgage Program M/E S 160.000 

TOTAL $3,845,000 

1) Power plant upgrade and primary wastewater treatment plant 
upgrade - EDA had $500,000.00 grant for the wastewater plant. 

WESTFIELD INDUSTRIAL PARK PROJECT 
Westfield, Tioga County, Pennsylvania 

FINANCIAL SOURCE & USE STATEMENT 

Phase I 

Industrial Wastewater Treatment Plant 

EDA $500,000 Grant 

Westfield Municipal Authority 1.086.000 Loan 

TOTAL 1,586,000 

Phase II 

Sites Development 

Pennsylvania Dept 

of Commerce $26,811 

Local Share 26.811 

TOTAL $53,622 



309 



Jobs: 100 Related Total Jobs 132 
3 2 Created 
*as of this date, June 1993, employment is 200 persons 



310 



ATTACHMENT 



311 



ATTACHMENT C 

Suggested Changes to the 

Federal Act of 1965 

Public Works and Economic Development Association 

Permit funds from Title III awards to be included in the revolving 
fund. In addition, some thought could be given to use that fund to 
provide an allocation to Section 304. Supplemental and basic 
Assistance under Section 304 of the Act (1974) . The Grants to 
States program was appropriated in fiscal years 197 5 through 1980. 
This program allowed states to fund qualified projects either 
wholly or partially. States could supplement local projects to 
meet local share requirements on EDA projects. 

Title II Direct Loan Program: We recommend that Congress 
reinstitute EDA's direct loan and guarantee program to help firms 
in distressed areas expand and create jobs. The program should not 
focus on a high volume of projects, but be directed toward firms 
that best meet selection criteria. 

EDA's loans and guarantees should focus on companies with adequate 
capitalization, that are in growing industries, and that include 
exporting, new technology, and environmental development; the 
program should avoid bail-outs, refinancing, and supporting firms 
in dying industries. 

EDA's direct loan program has not been funded since 1982 and no 
funds are available for guarantees in 1993. However, EDA still 
maintains its loan-making capability with financial analysts in the 
regions and Headquarters. 

The provisions of Title III are fine but the problem is funding. 
A major problem is in funds to study and analyze problems. 
Congress has heard increasing demands for extra funds for 
University Centers and Economic Development Planning, and Research. 
Since the Administration is giving technology a major emphasis, 
perhaps we should suggest specific language for the Authorization 
of the University Center program. The Appropriations include 
funding levels, but there is no companion authorization for 
Centers. 

Title IV determines an area's eligibility for assistance under 
PWEDA. Of the many arguments against continuing EDA, perhaps the 
most often heard is that "80 percent of the country is eligible" 
for EDA grants. Of course we realize that 80 percent of the 
country does not receive funding from EDA each year, and in fact 
the great majority of EDA assistance goes to areas that have very 
high unemployment. A temporary type of eligibility may be one way 
to eliminate the criticism. The agency could certify eligibility 
according to current statistics prior to accepting an application 
for Title I. 



312 



Title V. the Regional Conunissions. EDA could take the initiative to 
suggest either elimination or requesting appropriations. 

Title VI. Administration of EDA, has a provision in Section 602 of 
a National Public Advisory Committee on Economic Development. We 
feel that EDA should indicate to Congress an intent to ask the 
Secretary to form the Committee. 

Title VI could also include a section on Self Certification; Over 
the years, the EDA grant application process and requirements have 
become cumbersome. The Common Rule and other initiatives should 
permit EDA to accept applicant assurances of compliance without 
additional documentation. EDA leadership could request that the 
Committee address this problem through stipulations in legislation 
that exist in other federal programs. 

One of the keys to the ability to process the volume of LPW 
projects was a reliance on self certifications. Of significance 
should be the very few problems associated with the process. With 
over 10,500 approved projects, there was virtually no controversy, 
claims of fraud and abuse, or other problems. 

Perhaps the results of a change in attitude in Brazil could be used 
as an example of what we think is in order. Between 1979 and 1984 
Brazil tried to simplify their central government procedures. 
During that period it was determined to accept written statements 
from the interested party rather than third party and legal 
documents. Thus, a "presumption of truth" displaced the "rule of 
distrust." The savings has been estimated at $3 billion per year, 
with some 600 million documents removed from circulation annually. 



II. A Suggested Self Certification 

Over the years, the EDA grant application process and requirements 
have become cumbersome. The Common Rule and other initiatives 
should permit EDA to accept applicant assurances of compliance 
without additional documentation. While an issue within EDA, they 
have skirted making major improvements. EDA leadership could 
request that the Committee address this problem through 
stipulations in legislation that exist in other federal programs. 

The agency Excentralization Committee and virtually all Quality 
Action Teams have found that EDA grant requirements have become 
significantly complicated. Application processing times are long, 
and grantees are experiencing delays. Acceptance of Assurances and 
applicant "Self Certification" would help ease these problems on 
the applicant and EDA. 

We feel that this should be one of the first things the new EDA 
leadership should examine; we are optimistic that improvements can 
be made quickly. 



313 



Title VIII concerns Disaster Relief and has presumably been 
superseded by FEMA. We could suggest eliminating that Title if it 
is not to be used. 



314 

National Council for Urban Economic Development 



1730 K Street, N W.. Surte 915, Washington. DC. 20006 • Telephone (202) 223-4735 • Fax (202) 223-4745 
Jeffrey A Fini^le, Execulive Director 



Statement of Joseph A. Marinucci 

Director, Economic Development Department 

City of Cleveland, Ohio 

on behalf of 

THE NATIONAL COUNCIL FOR URBAN ECONOMIC DEVELOPMENT 

before the 

U.S. House of Representatives 

Subcommittee on Economic Development 

of the Committee on Public Works and Transportation 

June 24, 1993 



315 



Statement of Joseph A. Marinucci 

Director, Economic Development Department 

City of Cleveland, Ohio 

on behalf of 

THE NATIONAL COUNCIL FOR URBAN ECONOMIC DEVELOPMENT 

before the 

U.S. House of Representatives 

Subcommittee on Economic Development 

of the Committee on Public Works and Transportation 

June 24, 1993 

My name is Joseph Marinucci. I am Director of the Economic Development 
Department of the City of Cleveland, Ohio. I am responsible for providing services to 
Cleveland-based and other businesses who are considering expansion, retention, and/or 
relocation. Prior to my appointment by Mayor Michael White in 1990 I was the Deputy 
Director of the Business Development and Economic Development Financing Division for 
the State of Ohio. 

Thank you for the opportunity to testify this morning in support of the 
reauthorization of the Economic Development Administration. The future role of EDA is 
an important issue for urban economic developers across the country because it is the only 
remaining federal program to support the development of commercial and industrial projects 
in economically distressed areas. 

I am testifying this morning on behalf of The National Council for Urban Economic 
Development, known as CUED. CUED is a nonprofit membership organization 
representing over 1,200 economic development professionals from cities of all sizes, 
metropolitan areas and regions. The members of this organization are the public and 
private sector practitioners who are working to build local economies through the tools used 



316 



to create, attract and retain jobs. I am a longstanding member of the organization and 
currently serve on its Board of Directors. 

CUED has worked closely with the Economic Development Administration 
throughout our 25-year history. With EDA's support and through its member professionals, 
CUED has produced a large body of knowledge on the most effective strategies for 
economic development and approaches to issues such as training hard-to-employ youth, 
developing export markets and urban manufacturing. Through EDA-sponsored publications 
and conferences, CUED has been able to provide timely information to the economic 
development field that helps them to understand and adapt to global economic forces 
affecting their local economies. Recently, EDA sponsored a CUED forum and publication 
that reexamine the approaches to job creation given the tremendous changes occurring in 
the global economy. 

FORCES OF CHANGE 

One of the fundamental challenges facing the United States is the upgrading of our 
technology base and our workforce. A recent CUED conference on these issues was 
focused on industry competitiveness and how economic developers can help companies 
make the transition to high-performance manufacturing. Dr. Richard Florida of Carnegie 
Mellon University spoke at that meeting about how the U.S. and world economy is in the 
midst of a major transformation greater than any since the latter part of the 19th century. 
Traditional manufacturing, whidi relied on physical labor and skill to make things, is 
becoming obsolete, and the source of value now lies in intelligence and knowledge. In a 
survey being conducted for the Great Lakes Council of Governors, Professor Florida found 
that 60 percent of small and medium-sized companies in the Midwest are making the 
transition to high-performance manufacturing. He defined high performance manufacturing 
as "the ability to deliver high quality products, when they are needed, tailored to customer 
requirements, on-time, and at the lowest possible cost." 



317 



This transformation, which relies on the ability of workers to achieve innovation, 
changes almost everything we believe about industrial competitiveness, technology policy and 
economic development. The reason is that the framework in which current policies operate, 
including tax policy, the education system, technology policy and infrastructure investment, 
was built to support the old system of mass-production industry. An example is bank 
lending policies that require companies to hold inventory as collateral, a practice that runs 
counter to "just-in-time" manufacturing processes. Another example is government economic 
development programs that use job creation as a criteria for fulfilling program requirements 
when assistance to businesses to improve productivity may actually result in job loss. 

The fact that increased productivity without market grovrth means job loss is a 
concern of many states, including Peimsylvania and Ohio. While we are assisting 
manufacturers to improve productivity through investment in equipment, streamlined 
production processes, and converting from low value-added employment to high value-added 
manufacturing processes, we must also find ways to help companies expand their markets. 
Pennsylvania Secretary of Commerce Andrew Greenberg noted at the recent CUED 
conference that the state recognizes that the best job-generators are the businesses already 
located in the state, and therefore efforts to retain business get equal attention to business 
attraction in the state's economic development programs. 

State and local economic developers have had to become less dependent on the 
federal goverrmient for resources in these efforts and have become increasingly involved 
with a widening array of institutional partners. Our efforts are now driven locally, but we 
continue to look to Washington for resources and support. Clearly, there continues to be 
a role for the federal government in aiding us in the revitalization of urban economies, but 
we also must understand and continue to place great importance on local initiative, 
continuing to use federal resources to leverage, reinforce and harness this economic 
transformation. 



318 



EDA'S ROLE 

For more than 25 years, the Economic Development Administration has offered a 
very vital resource for helping localities to compete. Throughout the decades, the agency 
has continued to support and encourage local efforts to enhance economic growth. During 
the last 12 years, EDA has survived from year to year on Congressional appropriations but 
it needs reauthorization legislation that will give it a long-term mission which addresses the 
broad economic development and competitive issues confronting communities and regions 
across the country. 

After years of uncertainty, the agency is now repositioning itself to regain its role as 
a leader in shaping ideas and encouraging innovation. Secretary of Commerce Ron Brown 
stated in his confirmation hearings that the Department must lead the effort in ensuring 
economic competitiveness. He said this requires commercialization of new technologies, 
increased access to foreign markets, access to capital, adoption of high performance 
practices, and a skilled workforce. Secretary Brown also stated that EDA must play a 
significant role in assisting state and local economic development efforts to create and retain 
jobs. He noted that in his experience at the National Urban League in the 70s, he found 
EDA to be "very helpful to cities as well as to rural areas." We as economic developers 
hope that EDA becomes an agency that helps localities, particularly urban America, address 
the problems of today and tomorrow. We look to this Economic Development 
Subcommittee for leadership in helping to restore competitiveness to our nation's distressed 
areas. 

URBAN/RURAL IMBALANCE 

The Economic Development Administration has great potential for assisting cities 
and urban areas with infrastructure, business development and related innovative programs. 
Throughout its history, EDA has supported new approaches to revitalization in urban 
neighborhoods. Its focus, however, and its constituency are rural, and the bulk of its funds 



319 



go to small towns and rural areas. EDA was created at a time when cities were receiving 
a larger proportion of federal funding through urban renewal, model cities, and anti-poverty 
programs. For the past decade, however, the proportion of EDA funds to urban areas has 
sharply decreased. In recent years the rural-urban split in the use of EDA funds has been 
decidedly weighted toward rural areas, with 80 percent of its allocation in 1992 going to 
rural areas and 20 percent to urban areas. 

At the same time, economic development assistance across federal programs is being 
focused on rural areas. In the Department of Agriculture, the Rural Development 
Administration's (RDA) loan and grant programs for business and industry, community 
facilities, water and wastewater projects totaled over $1.6 billion in 1993. In addition, the 
Appalachian Regional Commission last year received $190 million for highway programs, 
community development, business and human development, and technical assistance. The 
Small Business Administration is targeting rural areas for economic development programs. 

Urban America, meanwhile, has no agency or program dedicated to its needs for 
economic development. The Department of Housing and Urban Development directs 
housing funds to cities, but the economic development component is not nearly as effective 
as it could be, because of the regulatory impediments imposed by the department. The 
Community Development Block Grant, intended as a flexible tool for communities' 
development needs, is being used less and less for economic development. Only seven 
percent of CDBG funds go toward economic development because of com(>eting priorities 
and the regulatory barriers involved. 

With an increased effort in rural economic development being pursued by the 
Department of Agriculture through the creation of RDA, we believe that the rural-urban 
allocation of EDA funding should correspond more closely with the proportion of rural- 
urban population in the U.S. CUED and its members stand ready to help EDA in designing 
a more active role for the agency in urbanized areas. 



320 



We believe EDA can be fashioned to provide a program that balances the demands 
of urban and rural constituencies while achieving a more important public benefit. The 
emphasis must be on creating jobs in disadvantaged areas where they are most needed. 
Poverty, unemployment, racial prejudice, shrinking tax bases, bankrupt governmental units, 
and erosion of the standard of living are common to both urban and rural areas. Yet 64 
percent of the U.S. population lives in urbanized areas, half of those in central cities. And 
62 jjercent of those living in poverty in the U.S. are in urbanized areas. The poverty rate 
in central cities is 17 percent compared to 13 percent in rural areas. 

The major economic development priorities of the federal government should be to 
address the institutional causes of the problems, wherever they exist. The areas with the 
greatest disadvantage are those with a geographic concentration of depleted human and 
economic resources, unequal access to educational and employment resources, low quality 
public service delivery systems, outdated industrial facilities, overworked and inefficient 
public infrastructure, inflexible local tax base, and displaced workers with unwanted skills. 
A focus on our urban economies is critical if we are to address these problems. 

NEEDS OF CmES 

American cities have been experiencing an out-migration of their middle-class, capital 
and investment. CUED believes that the federal role should be intensified to allow urban 
centers to compete with suburban locations. Cities are essential to the their regions' and 
the nation's economic growth. Public attention must not only be given to cities when there 
is a need to control unrest and to repair damage caused by environmental or manmade 
disasters. The federal government should be a more active partner in working with urban 
leaders to solve complex urban economic problems. Federal, state and local governments 
should work together to provide effective, efficient, and equitable solutions to economic 
problems facing cities. Government should be a "market enabler," encouraging the private 
sector to create market solutions to our nation's urban problems. 



321 



Our cities have a valuable infrastructure already in place, but we continue to develop 
in outlying areas because of the demolition and cleanup costs of existing or vacated facilities 
in inner cities. Many former industrial sites are now contaminated by the activity that 
occurred there in prior years. Environmental problems require investment in new 
technologies and clean up, particularly in older, primarily urban structures built in a time 
when less stringent environmental regulations and more lax enforcement of those regulations 
resulted in the massive levels of clean-up required today. Projects are being halted because 
of environmental problems and the difficulty of engineering site clean-up and mitigation 
efforts needed to allow private investments to go forward. 

Cities need resources to help turn those sites into productive and cost-competitive 
alternatives to suburban locations. Enterprise zones are one tool being used to provide state 
and local tax incentives for development in distressed areas, but more than tax incentives 
are needed to spur development in areas where the cost of remediation, the cost of 
infrastructure, and the lack of capital available are inhibiting investment. EDA is one of 
the most effective tools that could be used in enterprise zones to leverage this investment. 

EDA PROGRAMS 

EDA is seen by many economic development practitioners as the most effective 
federal program for economic development. In fact, many practitioners have told CUED 
that if additional federal funds were to be made available for economic development, they 
would prefer to see those funds go to EDA, provided the funds would go to urban areas. 
EDA is very effective at getting funds to where they are needed. Following the riots in Los 
Angeles last year, EDA was the only source of discretionary funds available. EDA provided 
$3 million for the rebuild effort and an additional $1.5 million to help restore the tourism 
industry. In the area of defense adjustment, EDA has been ahead of the issue, helping 
many communities to develop adjustment strategies before a base or industry shuts down. 



322 



In many communities, EDA grants are crucial for rehabilitating, repairing or 
constructing infrastructure and public works facilities for industrial or commercial 
development. These communities might not otherwise be desirable locations for expanding 
enterprises. Funds are typically used in conjunction with new development or 
redevelopment. Since some of EDA's assistance is targeted to areas experiencing either 
long-term or sudden and severe job loss, the aid goes directly to communities that would not 
otherwise be able to invest in needed public improvements. With these improvements, they 
can attract or expand business enterprises on available sites and increase their tax base. 

EDA funds are also used to provide both direct loans and loan guarantees to 
businesses. Nationally, over 80 percent of new job growth in the 1970s and 80s was driven 
by the development and expansion of small businesses. The "capital crunch" has choked off 
access to private financing for many small businesses and the current regulatory climate have 
made it extremely difficult for firms to borrow what they need. EDA loan guarantees help 
fill a gap for communities in supporting the small business sector. 

The focus of EDA funding throughout the years has been primarily in the area of 
public works. While infrastructure investments continue to be an important element of a 
community's competitive position, EDA should continue to broaden its focus in recognition 
of the role of technology and the importance of human infrastructure in the new economy. 
EDA should work closely with other Department of Commerce agencies such as NIST to 
encourage greater collaboration between federal laboratories and private industry and to 
assist the adoption of new technologies and the modernization of manufacturing. 

EDA's research has been important for helping communities to understand the 
changes that are taking place in the economy and to adjust to the new realities. EDA 
research and technical assistance funds have resulted in many creative initiatives at the local 
and regional level. These efforts should be expanded and used to leverage private sector 
funding in such initiatives. EDA's University Center Program currently funds 63 centers that 
help colleges and universities mobilize resources for the economic growth of distressed 

8 



323 



areas. This program is a valuable source of technical assistance for state and local 
governments and helps develop new information and programs in areas such as technology 
transfer and manufacturing modernization. 

EDA planning grants have enabled distressed communities to critically evaluate their 
economic potential and to look at long-term solutions. These funds continue to be very 
helpful to states and localities, but the amount of funds available limit the program's 
effectiveness. EDA should set aside a designated percentage of its planning grant funds to 
help central cities to prepare plans to clean up older environmentally-troubled industrial 
sites. The purpose of these efforts should be to restore the industrial base in central cities. 

EDA provides an essential tool in cities' and rural areas' attempts to promote local 
growth in their economic base and represents a way to address the constraints imposed by 
economic, social and fiscal factors. EDA funds can be used to achieve these objectives by 
either providing assistance to support businesses activities or providing the infrastructure, 
services and quality of life needed to encourage growth. The optimum use of EDA funds 
is achieved by targeting development to achieve economic benefits for locations, sectors or 
groups that are at a competitive disadvantage in the marketplace. Such targeted 
development is also achieved by identifying the obstacles to investment and attempting to 
overcome them using EDA funds as leverage. 

EDA funds can have a profound impact on state and local government efforts to 
"reinvent government" and design quality economic and social institutions to respond to 
urban problems. EDA should continue to invest its funds in those places where there is 
strong evidence that state and local government is working at governmental improvement. 
For example, EDA should redirect its public works grants to making investments in new 
"regional economic development infrastructure funds," which encourage central cities and 
suburbs in major metropolitan areas to cooperate on development projects. 



324 



On a government-wide scale, there needs to be a reordering of priorities to support 
economic development and to enhance the competitiveness of localities, regions and the 
nation. CUED looked to the President's economic stimulus package as providing the kinds 
of tools and a focus on urban areas that is urgently needed. Without additional spending, 
it is critical that existing programs focus their resources on these issues. Through EDA, the 
Small Business Administration, the Department of Housing and Urban Development and 
other departments and agencies, programs exist which, if reasonably funded and properly 
coordinated, can help communities to improve their economies and create jobs for their 
people, including those in urban areas and central cities. 



10 



325 

TESTIMONY OF 

THOMAS MCCLURE 

PRESIDENT-ELECT 

NATIONAL ASSOCIATION 

OF MANAGEMENT AND TECHNICAL ASSISTANCE CENTERS 

BEFORE THE 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 

HOUSE COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION 

ON THE 
REAUTHORIZATION OF THE ECONOMIC DEVELOPMENT ACT 

JUNE 24, 1993 



326 



Thank you, Mr. Chairman, and members of the Committee. My name is Tom McClure. For the past eight 
years, my "day job" has been Director of the EDA University Center at Western Carolina University, serving the 
28 westernmost counties of North Carolina. 

I am also the President-Elect of the National Association of Management and Technical Assistance Centers 
(NAMTAC) and the spokesperson for the EDA University Center Division of NAMTAC, which is composed of 
most of the EDA Centers. I am here to speak on behalf of the reauthorization of the Economic Development Act, 
and particularly on funding support for the EDA's nationwide University Center program. 

NAMTAC is an umbrella organization composed of university- and college-affiliated centers. The organization's 
mission is to assist in the transfer of academic-based information, research, and technology to communities and 
businesses in furtherance of economic development and industrial competitiveness. Our member institutions 
provide assistance with management, technology, and community economic development programs. 

OVERVIEW OF THE EDA UMVERSITY CENTER PROGRAM 

Funded under the U.S. Department of Commerce Economic Development Administration (with matching funds 
supplied by state, local and/or private resources), EDA University Centers provide high value economic 
development and technology transfer services to urban and rural communities and businesses. The EDA 
University Center program is unique because it stands as the primary bridge between business and the critical 
technologies, research and expertise of American colleges and universities. 

There is no "typical" or prototype EDA University Center. Each Center carves out its own niche to address the 
unique needs of the communities and businesses it serves. EDA Centers, like the Center I serve in western North 
Carolina, may serve sparsely populated rural areas; or they may be located in our most densely populated 
metropolitan areas. Although each Center is unique, there are some common characteristics: First, they usually 
provide direct one-to-one advice and counsel to entrepreneurs. Second, they help communities build the human, 
capital, and physical infrastructure -or capacity- to support and encourage economic development. Third, they 
serve as the catalyst to leverage university and community brainpower and Tmancial resources to increase the 
economic wealth and overall welfare of the region through the creation and enhancement of jobs. 

REQUEST FOR THE UNIVERSITY CENTER PROGRAM UNDER THE 
REAUTHORIZATION OF THE ECONOMIC DEVELOPMENT ACT 

In 1984, the majority of EDA University Centers were funded at $80,000. In 1992, Congress directed EDA to 
grant $130,000 to each University Center, and regrettably, EDA elected instead to fund most Centers at $104,000. 
(Between 1984 and 1992, Centers were funded at levels within a range of $40,000 to $100,000.) 

Obviously the Centers have faced a shortfall simply due to the cost of living over this time period. We could also 
do a more rational job of program planning if we had a predictable base level of funding from year to year. 
Further, we could effect greater positive changes for businesses and communities with additional funding to 
leverage each Center's scarce resources. 

Each Center's geographic and demographic service area is vast and each Center's demand for services has never 
been greater. We (the EDA Centers, the Economic Development Administration, and Congress) need to seriously 
address these concerns! Therefore, NAMTAC has set out its funding request for the upcoming fiscal year and the 
following five fiscal years to be included in the reauthorization of the Economic Development Act. Our 
authorization request also covers elements that we believe will improve the program. 

To restore diminished funding and to meet client demand, beginning October 1, 1993 (FY '94), a $150,000 annual 
funding level for each of the 64 existing University Centers is being requested from the appropriation committees. 
We have also requested an additional $500,000 annual allocation to institute a peer review-based quality 
evaluation program. The total budget request for FY '94 is $10,895 million. 

The EDA University Center directors recognize peer review as a critical need which will serve to strengthen the 



327 



EDA Centers. We are commined to implementing such a plan within whatever level of funding we receive. We 
foresee establishing peer review teams similar to those which are used by Small Business Development Centers, a 
Small Business Administration sponsored program. These peer review teams, composed of an EDA representative 
and two Center directors from other regions would conduct site visits to evaluate the operations of our sister 
centers on a biennial basis. 

The 64 EDA University Centers in place today are doing vitally important work with an extivmely low budget. 
However, there are six sUtes that do not have an EDA Center. It is critically important for legislation that 
reauthorizes EDA to include language to provide for additional centers so that every state can have at least one 
center with larger sUtes having two or three. We hope that Congress and the Economic Development 
Administration will adopt a Five Year Plan, which will call for the addition of four new centers in each of the 
next five years, and will establish a pattern of reasonable annual increases in funding. 

The EDA University Center Program deserves to be supported at least at the levels proposed in this budget itcni. 
Just as importantly, the Center Directors need to know what to expect in the way of federal support that they can 
count on from year to year. The Centers use their base level of federal funding to leverage state, local and 
private dollars in a multiplier model; however, when the federal share goes down, a similar negative multiplier is 
generated. 

Assuming that the FY '94 appropriation will provide for base level funding of $150,000 per Center, we suggest 
that this level be increased by an additional $50,000 per Center in each of the three fiscal yeare '95, •96 and '97, 
then held at $300,000 in each of the final two years of this Five Year Reauthorization period. 







FIVE YEAR PROJECTION 






NUMBER OF 
CENTERS X 


FUNDING LEVELS + 


PEER REVIEW = 


TOTAL 
BUDGET 


FY-QS 


68 


$200,000 


$530,000 


$13,530,000 


FY '96 


72 


$250,000 


$560,000 


$18,560,000 


FY -97 


76 


$300,000 


$590,000 


$23,390,000 


FY -98 


80 


$300,000 


$620,000 


$24,620,000 


1 FY '99 


84 


$300,000 


$650,000 


$25,850,000 



Oar request represents a small investment of federal funds for a program that exhibits a very strong positive 
impact on America's businesses and communities. The investment would be enhanced by our ability to leverage 
several times the amount of program dollars. 



ACCOMPLISHMENTS OF EDA UNTVERSITY CENTERS 

EDA University Centers nationwide have specific technological and economic development assistance delivery 
systems already in place which can serve as a key component for future industrial extension efforts. These 
technical assistance and economic development programs have successfully operated nationwide for over 20 years. 
The wealth of experience over this time frame has permitted the Centers to make numerous positive contributions 
to their communities and businesses. The EDA University Centers maintain close and regular contact with their 
constituencies in order to ascertain and meet their changing needs. The Centers not only helped to render 
technical assistance, but also: created industry networks; assisted in providing vital economic and demographic 
information; developed capital pools for business formation; helped implement industry cooperatives; and initiated 
numerous other projects. The Centers' unique role of linking higher education, businesses and communities 
provides a foundation upon which University Centers can play a crucial role in enhancing new industrial extension 



328 



service efforts. 

The following are examples of the range of activities the EDA University Centers undertake: 

• The University Center for Economic Diversification at the University of Michigan is helping 
communities that are facing major manufacturing plant closures, m^or job losses and economic 
distress. General Motors has announced plaas to close plants in six Michigan communities by 
1995, impacting 18,200 jobs. The University of Michigan EDA Center is coordinating activities to 
help communities begin to recover from these sudden and severe economic dislocations. 

Michigan will also be impacted by the imminent closure of the Wurtsmith Air Force Base. 
Historically, the Base has been responsible for an estimated $145 million annual economic impact 
in an area with traditionally high unemployment. The University of Michigan's EDA Center has 
worked with community and political leadership to devise a plan to convert the Base housing into 
a retirement community catering to military, government, and corporate retirees. 

• The Pennsylvania State Um'versity EDA Center, known as the Pennsylvania Technical Assistance 
Program (PENNTAP), helped a client with an idea. The client was the president, and only 
employee, of his company, and was working full-time for another company. The client had 
developed a technologically-advanced process for improving the performance of cutting tools. 
However, he needed assistance in (1) laboratory testing, (2) field testing, (3) obtaining a patent, 
and (4) obtaining the necessary start up capital. PENNTAP coordinated all of these activities. 
The Center's efforts involved working with several other agencies. By June, 1992, this one-man 
company had penetrated the Pittsburgh market, created three new jobs, served 43 customers with 
sales exceeding $10,000 a month, and experienced a sales growth rate of 25 percent per month 
over the second quarier of operation. 

• The EDA University Center at Eastern Kentucky University fostered the development of a 
secondary wood manufacturers network by creating numerous seminars and workshops, and by 
rendering technical assistance to numerous individual companies within this industry. The net 
job creation of these activities resulted in over 100 new jobs for eastern Kentucky. 

• The Washington State University EDA Center is helping the Confederated Tribes of the Colville 
Reservation by providing management and technical advice in all aspects of tribal business 
affairs. The EDA Center worked hand-in-hand with the Colville Tribal Enterprise Corporation, 
the Bureau of Indian Affairs, the Soil Conservation Service, and the WSU College of Agriculture. 

• The Arkansas State University Center serves an economically depressed rural region of the 
Mississippi delta. This EDA University Center has developed a nine-month Regional Leadership 
Development Program to focus on economic and community development and to promote 
cooperation among neighboring small towns and counties. The Arkansas State program has been 
offered to six diverse groups, representing 149 people from 35 towns and 14 counties. The 
program has been described as "Showing us how to develop a new kind of leader for rural 
America; one that can effectively lead appropriate local development, with the added values of a 
regional perspective and a unique network of regional resources to tap for help." 

• I am particulariy impressed with the number of leaders served, because we at Western Carolina 
just recently completed the first cycle of a similar program, graduating 38 leaders representing 17 
counties. The Western Carolina University EDA Center has a fairiy unique twist in our 
leadership program: we strongly encourage the participants to engage in a hands-on postgraduate 
project, in which they put the principles and skills they have learned to practical use in a regional 
economic development project of the graduates' design. Our graduates are currently engaged in 

a campaign to improve the workforce preparedness of the region through improving the education 
and training delivery systems. 



329 



• Western Carolina University's EDA University Center helped organize the Mountain Commercial 

Lending Consortium - an organization comprised of individual banks which pledged a total of 
$1,000,000 to make loans to small businesses that cannot satisfy conventional underwriting 
standards. 

CONCLUSION 

Let me say that today's American taxpayer realizes, more than ever, the importance of the federal government 
not to duplicate efforts or spend money unwisely. Our citizens don't want the wheel reinvented. Because of the 
University Centers' strong, positive impact on jobs within their jurisdiction, it makes economic sense to support 
an expanded EDA University Center Program. The Centers already have the people in place; the programs are 
effectively operating; the valuable resources of their Universities are linked and leveraged; and the connections to 
the business community and other key goveniment agencies are established and working. Therefore, the EDA 
University Center programs augment existing activities, whereas new programs must struggle to get up to speed 
before service can be provided. The amount of money requested for the next four years for the University Center 
program is extremely modest by federal standards, yet the investment will provide a high rate of return in terms 
of helping to ensure a strong, globally competitive economy and positively impact job creation and economic 
growth. 

Thank you very much. I would be pleased to answer any questions you may have concerning the EDA University 
Center Program. 



330 



ISA 



^1$ 



ISATIOIHAL ASSOCIATIOn OF DEVELOPMENT ORGAISIZATIOISS 

444 North Capitol Street, N. W., Suite 630, Washington, D.C. 20001 202-624-7806 FAX 202-624-8813 



Testimony of: 

ROBERT J. PACIOCCO 

Executive Director 

THE MID-EAST COMMISSION 

Washington, North Carolina 

and 

President 

THE NATIONAL ASSOCIATION OF DEVELOPMENT ORGANIZATIONS (NADO) 

before the 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 
COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION 

in the 

U.S. HOUSE OF REPRESENTATIVES 

June 24, 1993 

Washmgton, DC 



331 



STATEMENT OF BOB PACIOCCO, EXECUTIVE DIRECTOR OF THE MID-EAST COMMISSION 
(WASHINGTON, NORTH CAROLINA) AND PRESIDENT OF THE NATIONAL ASSOCIATION OF 
DEVELOPMENT ORGANIZATIONS (NADO), BEFORE THE SUBCOMMITTEE ON ECONOMIC 
DEVELOPMENT OF THE COMMITTEE ON PUBLIC WORKS AND TRANSPORTATION, U.S. 
HOUSE OF REPRESENTATIVES, June 24, 1993. 



Mr. Chairman, members of the Subcommittee on Economic Development, I am Bob Paciocco, 
Executive Director of the Mid-East Commission in Washington, North Carolina. I also serve as 
President of the National Association of Development Organizations (NADO). 

I would like to thank you, Mr. Chairman, and the ranking minority member, Ms. Molinari, 
for inviting NADO to testify at today's hearing. Our members are grateful for the Economic 
Development subcommittee's steadfast support for the Economic Development Administration (EDA) 
and the Appalachian Regional Commission (ARC) and for your efforts over the last dozen years to 
reauthorize both agencies. EDA is the federal government's most effective program for 
comprehensive rural economic development and ARC serves as a model for federal, state, regional, 
local and private sector cooperation. I would also like to recognize Kenneth Green, Executive 
Director of the Eastern Panhandle RPDC in Martinsburg, WV, a NADO Board member, who is also 
testifying before the subcommittee today. 

The situation this year is significantly different from recent years in that this is the first time in 
12 years that funding for EDA and ARC has been included in the administration's budget request and 
that the administration has submitted reauthorizing legislation for consideration. I am very 
encouraged by this because I believe that it provides friends and supporters of EDA and ARC a 
tremendous opportunity. With the continued backing of Congress, the advent of an interested and 
receptive administration, and adequate funding, EDA and ARC will become more effective partners 
in economic and community development efforts in rural areas and small cities. I appreciate the 
opportunity to testify in support of reauthorization for EDA and ARC and urge the members of this 
subcommittee to buUd upon President Clinton's requests for the two agencies. 

NATIONAL ASSOCIATION OF DEVELOPMENT ORGANIZATIONS 

The National Association of Development Organizations (NADO) is a national public interest 
group founded in 1967 to help professionals and local elected officials at the grassroots level share 
information and ideas. The association is the leading advocate for a regional approach to economic 
and community development in America's rural communities and small cities. In rural areas, 
economic conditions and development needs transcend jurisdictional boundaries. Likewise, strategies 
and solutions to rural distress are most effective when implemented at the substate, multi-county 
level. As a result, NADO members provide in rural areas economic and community development 
assistance to local governments and the private sector on a regional basis that is otherwise 
unavailable. 



332 



NADO members are regional development organizations, known variously as economic 
development districts, councils of governments, area development districts, regional councils, and the 
like. Regional development organizations draft long-term strategic economic development plans, 
perform a wide range of technical assistance, and provide small business gap financing. EDA has 
long supported regional development efforts through the Economic Development District program. 
(Attached to this testimony is a report produced by NADO that explains regional development 
organizations and their role in rural America. Also attached is the June 1993 issue of the Economic 
Development Digest, a monthly publication of the NADO Research Foundation in cooperation with 
EDA and the U.S. Forest Service. This issue focuses on substate regionalism and EDA economic 
development districts.) 

REAUTHORIZATION 

EDA and ARC programs have met with success since their development in the mid-1960s, 
despite being hampered tremendously by limited funding and less than enthusiastic support and 
guidance from the White House in recent years. This year, Congress has been presented with an 
opportunity to strengthen EDA and ARC, and through these agencies enable rural and small 
metropolitan America to participate in many of the initiatives introduced by President Clinton. To do 
this, I would like to touch on some areas where EDA is working well, but could be strengthened, and 
others where EDA is not working so well and should be improved as Congress considers 
reauthorizing legislation. 

Public Works Grants 

NADO, along with the National Association of Counties and the National Association of 
Towns and Townships conducted a survey at the beginning of this year in which economic 
development professionals and local elected officials identified infrastructure development (and the 
lack of infrastructure) as their primary concern. For rural and small metropolitan areas, EDA Title I 
Public Works grants are a major source of infrastructure fiinding for projects related to economic 
development. Other federal programs, such as the Department of Housing and Urban Development's 
small cities Community Development Block Grant program, are funneled through states, which often 
attach additional requirements making funding inflexible. In plain terms, rural areas rely on EDA 
infrastructure grants and EDA grants work. 

However, community and economic development have been severely limited due to a lack of 
funding. In response to President Clinton's stimulus proposal, EDA invited applications for public 
works grants at an increased rate in expectation of additional funding. The funding was denied when 
the Senate killed the President's stimulus package. This, coupled with EDA's expedited invitation for 
grant applications has caused the development of a pipeline for public works grants and the obligation 
of most of EDA's public works funds for fiscal year 1994. NADO supports a minimum of a $1(X) 
million increase for rural infrastructure projects in FY 1994 to help meet demand and clear the 
bottleneck in the application pipeline. At the Economic Development subcommittee hearings earlier 
this year established, there was considerable agreement that a great and urgent need exists for public 
works projects in distressed areas. Furthermore, there was general accord that a single federal 
delivery agency would be the best, and most efficient, method to coordinating funding for 
infirastructure projects. EDA has a proven track record for funding beneficial projects that create 
good, long-term jobs in a cost efficient manner. 



333 



EDA grants are very successful and effective. In fiscal year 1992, EDA awarded 178 public 
works grants totaling $153.3 million of federal dollars. After local matching funds were added, the 
projects totaled $329.5 million. These projects leveraged $797.6 million in private sector investment 
and created 28,489 jobs. The average dollar to jobs ratio was $5,382 per job created. In almost all 
cases, the projects would not have been undertaken, and these jobs would not have been created, 
without EDA public works assistance. / emphasize that $153.3 million in federal fitnds leveraged 
approximately seven times that amount in local and private dollars - $176.2 in local funds and 
$797.6 million in private funds. 

NADO urges Congress to retain the provision contained in section 403 of the Public Works 
and Economic Development Act of 1965, and supported by the administration, providing public 
works projects located within economic development districts with a ten percent increase of the 
federal share. In addition, NADO urges Congress to streamline the public works grant application 
process. Currently applications must be review by a Federal Assistance Review Board (FARB). The 
FARE process, added during the Reagan administration as an additional review step, is unnecessary 
and should be eliminated to speed up the grant-making process. This, along with increased funding, 
will help get the pipeline flowing at an steady pace. 

Economic Development Districts 

NADO also supports the findings of EDA's Economic Development District (EDD) Quality 
Action Team (QAT) final report, released in December, 1992. The QAT recommended that, should 
new funds be made available for EDDs, they be allocated in the following manner: up to one-third to 
fund new EDDs, at least one-third to increase the base funding level of all EDDs, and up to one- 
third for supplemental funding and one-time grants. 

A 1990 study by the Kansas Center for Community Economic Development (KCCED) 
determined that the development district program makes a major impact in small cities and rural 
areas, and that the program should be expanded. Currently, EDA has designated a number of 
regional organizations as development districts, yet limited resources prevent the agency from funding 
these districts. I understand that EDA has a list of over 30 additional regions that it would like to 
designate and fund if adequate funding became available. NADO members are eager to expand the 
development district planning program. Seed funding for planning and local technical assistance is 
the key to tapping the development potential in our nation's smaller communities and rural regions. 

Many EDDs are receiving the same amount they were originally awarded in 1970. This 
means that in real terms, allowing for inflation, most EDDs are funded well below 1970 levels. 
Congress provided the EDD program with a $2.2 million increase for FY 1992, the first increase 
since the 1970s, and then in FY 1993 funding was cut back to FY 1991 levels. Although the amount 
awarded EDDs is very small (a $55,000 base level), it provides the professional staff needed to help 
foster community development and economic diversification. In fiscal 1993, EDA provided matching 
funds to 293 multi-county economic development districts (EDDs) in 46 states for strategic planning 
and technical assistance to local governments through a regional approach. NADO urges 
subcommittee members to endorse raising the authorization level for EDD funding to $130 thousand 
to allow them to perform the services they are capable of providing, and of which rural areas are so 
greatly in need. 



73-118 0-93-13 



334 



Testifying June 15 before the House Banking subcommittee on Economic Growth and Credit 
Formation, EDA acting Assistant Secretary for Economic Development Craig Smith said that EDA's 
Economic Development Representative network "along with EDA's planning and technical assistance 
programs, are key factors in making the EDA program a true, long-range economic development 
program rather than just another grant making agency." EDA's Denver regional office Director 
Steven Brennen's testimony May 19 before the Economic Development subcommittee echoed the 
theme. "Economic development districts provide the backbone of both the EDA's programs and 
overall successful economic development. In highly rural areas the multi-county districts are essential 
in bringing needed economic development expertise to bear. There just is not the critical mass of 
resources in these sparsely populated areas to support the staff and attention needed for good 
economic development," according to Brennen. 

Regional Development Organization Role in Rural America 

Rural local governments depend on regional development organizations for professional 
assistance. In most rural communities, rural elected officials serve on a part-time basis and have little 
or no staff. Of the 40 municipalities in my five county region, 27 do not have managers or 
administrators; and of these, 16 have only a part-time town clerk. Therefore, my organization serves 
to augment and support the efforts of local elected officials. Most multi-jurisdictional organizations 
are also multi-functional, providing a variety of services from job training programs to solid waste 
disposal planning to providing capital for economic development lending- according to each region's 
needs. 

Small businesses often turn to regional financing programs to help leverage private investment 
and ease the credit gap found in rural America. For more than 25 years, economic development 
districts have exemplified the public -private approach to economic development. Many help rural 
entrepreneurs and small businesses secure otherwise unavailable capital. A majority of economic 
development districts manage EDA revolving loan funds and many are proven successful delivery 
mechanisms for such programs as the Rural Development Administration's Intermediary Relending 
Program and other lending programs. 

It should also be noted that many development districts also serve as Small Business 
Administration (SBA) 504 Certified Development Companies (CDCs). In fact, were it not for the 
EDA district program, rural areas would not have the staff capability to run CDCs. Approximately 
one half of all SBA CDCs were established by development districts in rural areas. I should stress 
that without these programs, many small businesspeople and entrepreneurs in rural areas would be 
denied access to funding for startup or expansion of small businesses. In my own region we offer our 
citizens five business loan programs with loan amounts ranging from $8,000 to $1 million. In the last 
four years we have made approximately 90 loans totalling $2 million. These loans leveraged an 
additional $2.5 million in private sector funds and created 190 jobs. 



Rural America and EDA/ARC 

Despite many popular misperceptions of rural America, one in every four Americans, or 62 
million people, live in rural areas. An additional 15 million people live in small metropolitan areas. 
Nationwide, there are approximately 140 small metropolitan regions with under 250,000 residents. 



335 



These 77 million Americans share many of the problems, such as poverty and high unemployment, 
more commonly associated with residents of big cities. However, residents of rural areas and small 
cities face many unique obstacles not shared by urban dwellers due to a number of factors including 
low population density, small tax bases, scarcity of capital, shortage of local leadership and the 
deficiency of planning and technical expertise in smaU communities related to these obstacles. 

Rural Americans are employed in sectors far more diverse than farming: only 7 percent of 
rural residents are employed in agricultural industries, while 29 percent are employed in service 
industries and 2 1 percent hold manufacturing jobs. 

Furthermore, rural Americans face a lower rural per capita income ($13,786) than the national 
average ($17,592); a higher rate of unemployment (8.5 percent) than the national average (7.6 
percent); a greater poverty rate (16.8 percent) than the national average (12.4 percent); as well as a 
higher rate of students dropping out of high school (30.8 percent) than the national average (23.5 
percent). Again, in our region these figures are much worse. 

With federal and state cutbacks moving our intergovernmental partnership into an 
intergovernmental system of mandates, rural local governments increasingly rely on regional 
organizations for answers to their development needs. Indeed, regionalization encompasses long-term 
development planning, local government services, economic development activities, and 
environmental management. All of which are included in elements of EDA's overall development 
strategy. Across the country, EDA's economic development districts and ARC's local development 
districts are the catalysts for strategic planning in rural America. 

We view economic development broadly, including small business development and traditional 
infrastructure construction, but also in non-traditional areas such as telecommunications, health care, 
job training, day care and education. Providing technical assistance to local governments and the 
private sector, regional development organizations respond to the needs that are identified at the local 
level, by local people. Through the years, the Economic Development Administration's modest 
investment in regional development organizations in rural America, as well as ARC's work in its 13 
state region, have been enormously important in building capacity and stimulating growth in local 
economies. EDA and ARC have provided the institutional capacity and development dollars 
otherwise unavailable. 

Dtfatse Conversion 

NADO also urges EDA to use economic development districts as part of its defense 
conversion strategy. In distressed communities, EDDs are prepared to respond to and meet local 
needs as identified at the local level. EDDs have the flexibility to respond to challenges and the 
capacity to provide rural communities with the ability to react to new causes of economic distress, 
such as base or industry closure due to military downsizing. Economic development districts, as part 
of the overall economic development program (OEDP) they prepare as required by EDA, can help 
communities plan for defense conversion related problems and prepare a regional strategy to counter 
these obstacles. 



336 



Revolving Loan Funds 

NADO in the strongest possible terms urges Congress to pass legislation directing EDA to 
defederalize RLFs. In a recent NADO survey of EDA RLF grantees, over half the administrative 
problems listed by respondents stemmed directly from the perpetual federal nature of RLF dollars. In 
addition, EDA's RLF Quality Action Team final report recommended that EDA publish a regulation 
declaring that once-lent RLF funds be defederalized. Last year, the House Public Works and 
Transportation Committee Report accompanying H.R. 4157 contained language stating that "once all 
EDA grant funds have been utilized by the grantee to make loans to the initial round of borrowers, 
funds subsequently loaned from the RLF shall not be considered as being derived from Federal 
funds. " In the past, EDA has changed RLF processes and revised requirements, even on funds 
recaptured after the first round of lending. This causes undue burden for RLF lenders. Precedence 
exists for defederalizing RLFs. One example is the Rural Development Administration's Intermediary 
Relending Program, which allows lenders control of once-lent funds. We are not asking that we not 
be held accountable. We expect and urge accountability; however, we are asking for flexibility that 
can be possible through defederalization. 

Defederalization of RLFs is terribly important and is one of NADO's priorities. I am please 
that members of the subcommittee have taken an interest in seeing this problem resolved. I am also 
aware that the House Banking, Finance and Urban Affairs subcommittee on Economic Growth and 
Credit Formation addressed the issue during a recent hearing and EDA is studying the issue. NADO 
urges the members of the Economic Development subcommittee to continue their efforts to 
defederalize EDA RLFs and I am confident that the issue will be reconciled. In the process, we 
would urge the subcommittee to increase the authorization level for funding for RLFs and direct EDA 
to simplify the existing RLF procedures 

Included in the RLF QAT final report were a number of recommendations to improve the 
program. One recommendation that EDA has thus far not implemented is a proposal to develop a 
training program to improve the performance of RLFs. The QAT guided EDA to establish a formal 
training schedule for EDA regional directors and Title IX coordinators, which would then be 
expanded to RLF grantees. To date, EDA has not been able to implement such a training program 
due, I would imagine, to a lack of funding. Although NAEK) has run a number of training seminars 
for RLF grantees, we urge Congress to support funding for addition training. 

As the subcommittee develops reauthorizing legislation, NADO would be please to answer 
questions or to help in any way possible to address concerns about the RLFs or other EDA programs. 
Mr. Chairman, we thank you, the Ranking Member, Ms. Molinari, and the members of the 
subcommittee for your efforts to reauthorize EDA and ARC. We ask that you join us in urging the 
Clinton administration to reinvigorate the Economic Development Administration and Appalachian 
Regional Commission. We appreciate the support of this Subcommittee and the entire Congress, and 
we thank you for this opportunity to testify. If you have any questions, I would be happy to try to 
answer them. 



337 




-nnnnF 



]^m 




ECONOMJ UMEI ^OPMENT 

[ DIGEST ) 



Vol. 2, No. 6 A monthly report for the economic development community 



June 1993 



Substate Regionalism In the US: What is the Best 
Diversification and Responsiveness Way to Evaluate 



Ek:ononiic Development District (EDD) 

Regional Planning Commission (RFC) 

Plcmning and Development District (PDD) 
Council of Governments (COG) 

Economic Development Commission (EDC) 
treii Devcloiuiicnl Disirict ( mi)) 

Business Development Corporation (BDC) 
Local Development District (LDD) 



According to "An Etiquette for 
the 1990s Regional Council" by 
Patricia S. Atkins and Laura 
Wilson-Gentry, substate regional 
organizations look and act 
differently than they did in past 
decades. Known by a variety of 
names (see above examples), 
regional councils are substate, 
multlcounty planning and 
development organizations that 
provide an array of services. The 
authors identify over 500 of 
these regional organizations in 
the US. 

Most regional councils were 
created between 1965 and 1975. 
At that time, regional councils 
served primarily as comprehen- 
sive planning agencies. These 
multlcounty agencies worked 
closely with the federal govern- 
ment, which emphasized re- 
gional approaches and provided 
funding through a large number 



of federal pro- 
grams. As the 
federal govern- 
ment reduced 
the number of 
comprehensive 
federal planning 
programs directly 
supportive of 
substate region- 
alism, regional 
council activities 
shifted from 
federally man- 
dated planning to membership 
assistance and services delivery. 
The new regional council became 
market sensitive by staying 
attuned to customer preferences 
and became consumer driven 
rather than provider driven. 

In addition to comprehensive 
planning, regions now sponsor 
many programs, including 
services for the poor and elderly, 
job training, small business 
finance, and minority enterprise 
programs. Regional councils 
have also developed closer 
relationships with the states 
during the 80s. 

TlieeOs&yOs 

In the formative decades for 
regional councils, prudence 
dictated a low profile for the 

"Regional" continued on page 7 



a Program? 

Government programs have 
historically been measured by 
how program mangers conform 
to specific standards or whether 
or not they have followed the 
correct procedures. Many public 
administrators feel that this 
system of "compliance account- 
ability" pays little attention to 
whether the actual goals of the 
program are being met. 

In academic circles the debate 
is referred to as "compliance 
accountability versus perfor- 
mance accountability." Some 
public managers believe the 
government should not ask did 
you follow the procedure' but 
rather did you accomplish the 
program's goals. 

Performance accountability is 
capturing the imagination of 
many in government as the best 
way to measure if a program is 

"Evaluate" continued on page 7 



In This Issue... 

Viewpoint 2 

"DigesUbles" 3 

EDD Map 4 

EDD Map 5 

Enterprise Zones 6 

Training Calendar 8 



A publication of the National Association of Development Organizations (NADO) Research Foundation 



338 



Page 2 



Economic Development Digest 



June 1993 




This month's Digest has two 
articles on substate regional- 
ism. The regionalism article on 
page one describes the changes 
that have occurred during the 
Uist 30 years, eind shows that 
regional councils have adapted 
to changing circumstances. 

The Ek^onomlc Development 
District (EDD) article below 

Editor's Note 

The May 1993 D^esf con- 
tained an ari^lst's rendering of a 
map of nonmetropolitan America 
on page two. A number of 
readers, including the Albemarle 
Commissions Clarke Martin in 
Eastern North Carolina, wrote to 
tell us that their area had been 
incorrectly identified as metro- 
politan on the map. 

The map was titled "What is 
Rural America?" but showed 
nonmetropolitan counties. 
Although most people use the 
words "nonmetropolitan" and 
"rural" interchangeably, they 
have very distinct meanings. 
Nonmetropolitan is a defmitlon 
from the OIBce of Management 
and Budget (OMB) and was used 
to create the map. Rural is a 
definition used by the Census 
Bureau and is much more 
inclusive than nonmetropolitan. 

For example, while OMB 
states that about 80 jjercent of 
the US land mass is 
"nonmetropolitan," the Census 
figures show almost 98 percent 
of the US area as "rural." We 
apologize for the cot\fusion. 



describes how these regional 
organizations serve a porUcu- 
larly important role. Of the 
approximately 500 regions that 
exist today, more than 300 are 
Economic Development Dis- 
tricts. The map on pages 4 and 
5 shows the boundaries of the 
existing EDDs. 

Regional coordination and 
regional service delivery are not 
new Ideas. Most of the federal 
programs that promote regional- 
ism were created In the 60s. 
However, today more than ever, 
regionalism Is not a luxury, but 
a necessity. 

Local governments simply do 
not have the resources or 



capacity to provide many 
essential services by them- 
selves. When local govern- 
ments participate In a regional 
program, they are creating the 
Institutional cap)acity to solve 
their area's problems in a more 
efficient way. 

Although founded in the 
60s, regional development 
organizations are Ideally suited 
to meet the challenges of the 
90s. Meiny of these oi:ganiza- 
dons have expanded their scope 
to meet the needs of the com- 
munities they serve. With 
continued communication and 
educational efforts, regions will 
help local governments meet 
new challenges. 



Economic Development Districts... 
See This Month's Centerfold Map 



Ek;onomic Development 
Districts (EDDs) are multi- 
county, planning and develop- 
ment organizations that encour- 
age cooperation between citi- 
zens, local government ollicials. 
and the private sector. Origi- 
nally created in the 1960s by 
the Economic Development 
Administration, they have grown 
in number to over 300 and are 
located throughout the US (see 
the map on pages 4 and 5). 

Local governments, particu- 
larly In rural and small metro- 
politan regions, depend on 
E>:onomic Development Dis- 
tricts for professioueil assis- 
tance. In many communities, 
local elected ofllcials serve on a 
part-time basis and have little or 
no staff. For example, the Mid- 
East Commission, an Economic 
Development District in North 
Carolina, serves a rural five 
county region. Of the 40 mu- 
nicipalities. 27 do not have 
managers or administrators, 
and only 16 have a part-time 



town clerk. Like most EDDs, the 
Mid-East Commission is multi- 
functional, providing a variety of 
services from job training pro- 
grams to solid waste disposal 
planning, and small business 
finance. 

The December 1992 Economic 
Development District Quality 
Action Team Report identified the 
mission of EDDs as follows: The 
mission of an Economic Develop- 
ment District is to identify and 
address economic problems and 
opportunities through an overall 
economic development program, 
which is prepared and coordi- 
nated locally by a loccilly con- 
trolled multicounty orgemization, 
and uses EDA programs and all 
available resources." 

To qualify as an EDD, a region 
must first be designated. On the 
EDD map, designated Districts 
are shown in gray, and funded 
Districts are shown in green. For 
cidditiontd Uiformation on the 
EDD program contact Luis F. 
Bueso at (202) 482-3027. 



NADO Research Foundation, the research and training aim of the National Association of Development Organizations 



339 



Economic Development Digest 



Page 3 



□ 



Development "Digestibles" 



Have Inspectors SBA Export 
General Been Video Available 
Successful? 



r^ 



i 



r 



Have Inspectors General (IG) 
been efTecUve agents in the fight ■ 
against government waste, fraud, 
and abuse? In a new book 
published by The Brookings 
Institution. Moniloring Govern- 
menl: Inspectors General and the 
Search for Accountability, author 
Paul Light argues that IGs have 
been largely unsuccessful. IGs 
were given the freedom to moni- 
tor according to three very 
different philosophies: compli- 
ance accountability, performance 
accountability, and capacity- 
based accountability. As Light 
demonstrates. IGs became 
increasingly oriented toward 
compliance accountability. 
Compliance accountability relies 
on detailed rules and regulations 
to promote conformity. The 
autiior attributes the shift to the 
fact that politicians, in both the 
legislative and executive 

branches, naturally find compliance monitoring 
more attractive. Compliance monitoring pro- 
duces clear-cut results that may easily be used 
to preserve a program's 
political \iability. Light 
argues that IGs ulti- 
mately must fail if they 
continue to ignore long- 
term strategies for 
short-term solutions. 
He concludes that "the 
IGs have not done their 
job poorly, but they may 
be doing the wrong job - 
- putting too much 
emphasis on compli- 
ance and not enough on performance and 
capacity building. " For more iTiformation call 
The Brookings Institution at (202) 797- 
6000; copies are $1 2.95. 



The US Small Business 
Administration and the Bank of 
Boston have announced the 
creation of a new educational 
videotape designed to "help take 
the fear out of exporting" lor new 
exporters. The 
35 minute 
"Basics of 
Exporting" video 
explains the nuts 
and bolts of selling 
overseas and is 
geared toward the 
no\ice. The video 
provides information 
on selling and distributing, 
getting goods overseas, payment 
mechanisms, and sources of 
financing and marketing re- 
sources. The "Basics of Ex- 
porting" video is being distrib- 
uted nationwide by the SBA 
and can be purchased by 
calling (800) 827-5722. The 
cost is $30.00. 



Online Service 
for Riual Areas 

HandsNet. an online' com- 
puter service for organizations 
promoting economic and social 
change. pro\ides users with 
notices on federal and state 
public policy and legislation. 
HandsNet also summarizes 
human service issues from 
national newspapers and wire 
services, and offers forums on 
various acvelopment and social 
change issues. The forums put 
users in touch with other organi- 
zations working to promote 
development in rural America. 
Topics discussed include micro- 
enterprise and small business 
development, employment and 
job training, and strategic plan- 
ning. Environmental topics. 
Including solid waste and waste- 
water disposal, are also covered. 
In addition, HandsNet proWdes 
electronic data transfer, e-mail 
and FAXing services. Tlie com- 
munications software costs $100 
and a one year's subscription is 
$270. For more information, 
call (408) 257-4500. 




Timber Bridges Are A Viable 
Alternative With SLAM 

The US Forest Service, in conjunction with New 
Me.xlco State University, and local resource conserva- 
tion and development districts (RC&Ds) has devel- 
oped a new computer program. SLAM, to help in the 
design of timber 
bridges. SLAM, or 
Stress Laminated 
Wood Deck Design 
program, is avail- 
able for $60.00 and 
is being previewed 

at a conference in Las Cruces, NM. The Timber 
Bridge and Wood Structure Conference will be held 
June 8-10. For m.ore information call Jornada 
RC8LD at (505) 526-1424. 






NADO Research Foundation, the research and training arm of the National Association of Development Organizations 



340 




341 



Page 6 



Economic Development Digest 



Economic Empowerment Act 



The President's Enterprise Zone Proposal 




The Clinton Atiniinist ration 
has released preliminary inlor- 
mation on the Economic Empow- 
erment Act of 1993. President 
Clinton discussed his plan during 
a May 4 conference Ciill 
to a number of commu 
nlty leaders. The act 
would create 10 em- 
powerment zones, six 
urban, three rvira! and 
one Indian reservation: 
and 100 enterprise 
communities. 65 
urban. 30 rural, imd 
five Indian reserva- 
tions, in economically 
distressed areas. The Economic 
Empowerment Act incorporates 
"traditional" enterprise zone tax 
incentives as its foundation. It 
builds on this foundation by 
including provisions recognizing 
"human and community needs" 
such as education and job 
training, day care, housing, and 
community policing. 

Challeiige Grant Process 

Empowerment zones and 
enterprise communities will be 
designated through a competi- 
tive, "challenge grant" process. 
To apply, eligible communities 
will be required to submit a 
comprehensive strategic plan 
demonstrating how the commu- 
nity, private sector, and local 
government will work together to 
deliver and use government 
services in "innovative" ways. 
President Clinton's overview of 
the plan released at the May 7 
briefing states. "This proposal 
offers local communities the 
incentives, targeted investments, 
deregulation and flexibility they 
need to work with the private 




sector to develop comprehensix'e 
economic strategies to generate 
business, create jobs, make their 
streets safe, build community. 
and empower people." 

Increased Flexibility 

Applications will be 
made to an Enterprise 
Board, made up of the 
various Cabinet level 
Secretaries, and up to 
1 1 individuals desig- 
nated by the President. 
The Board will serve as 
"a single point of 
contact" to review 
proposals, comprehensive strate- 
gic plans, and "requests for 
assistance and regulatory waivers 
for each local community" if it 
determines that a waiver would 
fuither the goals of a 
community's strategic plan. 

Other 
Components 



In addi- 
tion to 
enhanced 
flexibility to 
coordinate 
strategic 
plans, 
empower- 
ment zones 
and enter- 
prise com- 
munities will 
be eligible 
for five basic 
forms of 
incentives 
and invest- 
ments: (1) 
capital incentives such as tax 
exempt bonds for investments in 
tangible property in the zone; (2) 



Long-term, stable 
economic growth in se- 
verely distressed areas 
must be achieved 
through a coordinated 
plan of economic, hu- 
man, and physical 
development... Not a 
single dollar will go out 
without a coordinated 
strategy 

-Bill Clinton 



"empowerment" incentives such 
as "Resident Empowerment 
Saxangs Accounts" for educa- 
tion, purchase of a first home, 
or starting a small business: (3) 
employment and training 
credits for zone residents: (4) 
investments for enterprise 
grants and community policing: 
(5) "zone priority investments" 
giving designated communities 
priority status when applying 
for federal funds essential to 
their comprehensive economic 
development strategy. Including 
community development banks. 
SBA and Commerce funds and 
technical assistance, and job 
training. 

Funding 

The president has requested 
that at least $3 billion in exist- 
ing federal program funds be 
targeted to 
empowerment 
zones and 
communities. 
In addition, 
$500 million is 
authorized for 
FY 94 and 95 
for "Enterprise 
Grants" and an 
equal amount 
for "Commu- 
nity Policing. " 
Furthermore, 
the budget 
includes $4.1 
billion over five 
years in tax 
incentives for 
designated 
communities, 
with 80 percent of that cost 
coming from employment and 
training wage tax credits. 



NADO Research Foundation, the research and training arm of the National Association of Development Organizations 



342 



Ek:onoinic Development Digest 



Page 7 



'Regional" continued ^om page 1 

newcomers, as they advanced 
from a posiUon of non-existence 
to virtual coverage of the United 
Stales. The 60s saw authoriza- 
tion of many new substate 
organizations including Eco- 
nomic Development Districts 
(EDDs) created by the Economic 
Development Administration (see 
map on pages 4 and 5). and 
Local Development Districts 
(LDDs) created by the Appala- 
chian Regional Commission, 
both in 1965. By their peak year 
in 1976. 669 regional councils 
existed. 

The 70s were a period of 
further federal support of re- 
gional councils. Significant 
federal initiatives in comprehen 
siue health care planning, com- 
pre)y;iisive employment training. 
comprehensive substance abuse 
planning, emergency medical 
systems netioorks. and elderly 
care planning coordination 
stimulated regional council 
entrance into the 
health and 
human sennces 



By the end of 
the 70s there 
were 47 federal 
programs that 
gave preferential 
treatment to 
regional councils 
as eligible 
recipients or 
required a 
regional plan or 
planning agency 
for receipt of funds. 

The 80s & 90s 



The low profile, close federal 
partnership pattern was rear- 
ranged in the 80s as the Reagan 
presidency ushered in an era of 
public policy that focused on the 
private, rather than public 
sector. Through the Omnibus 



Budget Reconciliation Act of 
1981. 59 categorical grant 
programs were eliminated, ajid 
80 other categorical programs 
were consolidated into nine 
block grants. All of the block 
grants were state-administered. 

Remaining progrtmis were 
recast to enlarge state responsi- 
bibty and autonomy, while tlie 
federal-regional and federal-local 
relationships were neglected. In 
many polaces the locus of re- 
gionalism began to shifte to the 
state level. 

Some states maintained 
regional councils in the absence 
of strong federal support and 
gave regional organizations 
Increased authority to directly 
deliver areawide services during 
the 80s. 

Atkins and Wilson-Gentry 
identified five rules that regional 
councils followed in their forma- 
tive years; 1) stay with the feds. 
2) maintain a low profile. 3) 
provide comprehensive planning 
assistance only, 4) don't com- 
pete with the 
public sector. 5) 
and don't 
compete with 
the private 
sector. 



Regional acti'vi- 
ties have diversified, 
and shifted from fed- 
erally mandated 
comprehensive plan- 
ning to membership 
assistance and pro- 
fessional service de- 
livery. 



Today, 
regional coun- 
cils have a new 
set of rules 
according to the 
authors: 1) go 
with the states, 
2) market your 
agency, 3) pick 
a few things to do well. 4) invite 
competition. 5) and be innova- 
tive. 

This article was based on a 
paper presented by Patricia S. 
Atkins ctnd Laura Wilson- 
Gentry, at the 1992 Regional 
Cooperation Symposium, 
Wright State University, 
Dayton, Ohio, May 29 & 30, 
1992. 



"Evaluate" continued from page 1 

having the desired eflect. Made 
popular by the book Reinventing 
Government, performance ac- 
countability sets goals or objec- 
tives for a program and measures 
the progress made toward them. 
Instead of asking if the correct 
paperwork was filled out in 
triplicate, the question becomes: 
was the region's economy im- 
proved? 

Compliance accountability 
relies on detailed rules and 
regulations to promote confor- 
mity. Compliance management 
assumes people have to be told 
exactly what to do and how to do 
it. 

Time to Peifoim 

The Director of the Office of 
Management and Budget. Leon 
Panetta. has called performance 
accountability "the foundation 
for much of what we seek to do. 
as we go about the task of 
reinventing government." 

Not only is the concept 
gcilning popularity within the 
executive branch, but also with 
Congress. Senator William V. 
Roth Jr. (R-DE) has introduced a 
bill that would establish perfor- 
mance measurements for federal 
agencies and set up 10 demon- 
stration projects to try the 
concept in real life situations. 
The bill would also create five 
pilot projects tying program 
achievement with resources. 
'Too often in Washington, there 
is a tendency to focus just on 
how a program is spending its 
money and whether it is follow- 
ing proper procedures - with 
little concern over what the 
program is actually achieving." 
said Roth. The bill has been 
endorsed by the Clinton admin- 
istration. 

(See the related book review 
on Inspectors General, and 
their effectiveness on page 3.) 



NADO Research Foundation, the research and training ann of the National Association of Development Organizations 



Page 8 



343 



Economic Development Digest 



^ Training Calendar 



July 



July (continuedi 



September (continued) 



July 17-30 

Ratloiul AaaocJation of Ana 

Afemcies on A(Ib( (NAAAAJ 

Annual Conference 

Washington, DC 

12021 296-8 130 



July 13-23 

Council of State Commtmlty 

Derelopment Afendea (COSCDAJ 

Annual Slate CDBG Managers Meeting 

Washington. DC 

12021393-6435 



September lS-21 

Conacll of State Conunmilty 

Derelopment Agendca (COSCDAJ 

19th Annual Conference 
Bolton. VT 
(2021 393-6435 



Jal7 18-21 

O mnm i m tty Development Society 

25th Annual Conference 

Mlhraukee.Wl 

(414)276-7106 



July 16-30 

national Aaaodatloii of Coontlcs (NACo) 

Annual Conference 

Chicago. IL 

(202)393-6226 



The Economic Development Digest Is published 
monthljr by the NADO Research Foundation. 
Publisher Allceann Wohlbrack 
Editor Gregory J. Schlefelbeln 

Contilbaton: F. Otcmi Hlnea. 
Scott D. Whipple, tsd D*tU A. WltUn 



tins publlcauon Is preparrd under 3 cooperative 
agreement wllh the US Department of Commerce s Economic 
Development Administration, with additional funding pro- 
vided by the US Department of Agrlcujluir s Forest Service 
EDA Award 99-06-07329 Opinions In the Digesl do nol 
necessarily irllecl official EDA or Forest Sentce policy 
ISSN 1060-5339 Subscriptions free. 

For more Inlormallon. contact the NADO Research Foundation 
at 12021 624 7806 or FAX ai 12021 624 8813 

JVADO Research Foundation 
Board qf Directors 



July 39-Aiij 1 

Ifadonal Aaaodadtm of Hoflslllg 

and Redevelopment OfBdala 

Annual Conference 
Fort Laudenlale. FL 
13121782-2958 



August 

Aufust 2-4 

SoUd Waste Aasodadon of 

North America (SWANA) 

Annual Show 
San Jose. CA 
(301)585-2898 



Septemlier 

September 8-9 
NaUonal Aasodadon of 
Towns and Townahips (NATaT) 

Annua] Conference 
Washington. DC 
1202)737-5200 



September 13-17 
Solid Waste Aasodadon 
of North America (SWANA) 

Manager of Landfill Operations Training 

SeatUe. WA 

(301)585-2898 



October 

October lS-33 

Nadonal Confrcss for Ctmuntmlty 

Economic Derdopment (NCCED) 

Mid-Year Conference 
San Francisco. CA 
(2021234 5009 



S-9 

National Aasodadon of 
Development Organlzadona (NADO) 

26th Annual Conference 
San Antonio. TX 
(202)624-7806 



November 10-13 
Edison Electric Insdtnte 
\ American Gaa Aaaodadon 

The Role of UtlllUes in 
Community Based Development 
Washington. DC 
(703)841-8531 



Economic Development Digest 

National Association of Development 
Organizations Research Foundation 
444 N. Capitol Street, NW. Suite 630 
Washington, DC 20001 



Non-Profit Organization 

US Postage 

Paid 

Washington, DC 

Permit No. 6315 



FOfiWARDlNG AND RETURN POSTAGE 
GUARANTEED. ADDRESSCORRECTION 
REQUESTED 



344 



How are 
regional 
developraent 
organizations 
helping 62 million 
rural Americans 
build communities 

AREP( 

and. create iHiNAiioM« 

jobs? 



A REPORT FROM 



ASSOCIATION OF 
DEVELOPMENT 
ORGANIZATIONS 
niADO 



345 



What is 

rural America? 




Raral ortot axcMd 
tht national avarag* 
in IIm foliowing 
cotogoriM: 

■u.|lwrf 



w 

In addition, rural 
por (apito iMonio it 
far lowor ($13,786) 
tlian llio notional 
ovorogo ($17,592). 



One in evf ry four Americans, or 62 million people, live in rural areas, a number equal 
to those who live in inner cities. An additional 15 million people live in small cities 
and towns. These 77 million Americans share many of the same problems as big city 
residents, such as poverty and high unemployment, 1)ut face unique obstacles because 
they are dispersed over hundreds of thou.'sands of square miles. 

Contrary to popular belief, rural America is far more than famdand. In rural 
areas, agriculture accounts for less than seven percent of employment. The service 
industry accounts for 29 per<ent of rural employment and manufacturing makes up 21 
percent. 

Most of America is composed of small cities, counties, towns, townships, villages 
and boroughs. Of all the local governments in the U.S., 86 percent serve populations 
under 10,000, and half have fewer than 1.000 residents. 

WHY IS A HEALTHY RURAL ECONOMY IMPORTANT? 

In order for America to have a strong national economy, rural areas must thrive and 
grow. But rural areas frequently suffer from social, geographic and economic isolation 
and have limited investment and institutional capacity. 

In an age of rapid social and economic change, America's future is intricately tied 
to the prosperity of both urban and rural sectors. Rural families want to contribute to 
the growth and development of a healthy economy and to play a significant role in 
creating economic security for all Americans. 



346 



Wliat are 

regional development 

organizations? 

Regional development organizations are multi-county planning and development 
districts that encourage cooperation between citizens, local government ofTicials, and 
the private sector. Initially created in the 1960s, they have grown in number to over 
300 and are located throughout the U.S. These regional organizations are best 
equipped to help rural areas because they provide a critical mass of expertise needed 
at the local level. 



Regional development organizations are known by many names, including: 

ArM DtvclopMal Mstrid (AM) 
■•fiiiMt D«*«lepMMl CerperotiM 
CMniil of GovcranMli (C06) 
D«v«lepmMl (ogMil 
E<omnii DavclepaMiil Cennitsioii 
EionoBili D*v«lopmant Dltlrkt (EDD) 
lota! PavaiopmMl Distrhl (IDD) 
Ptanning DIstrid Commission (PDC) 
Plonning and Development Distrid (PDD) 
Regional Development Center (RDC) 
Regional Planning Commission (RPC) 

Regional development organizations are the catalysts for strategic planning in rural 
communities. They help identify local needs and priorities. In addition to planning, 
regions sponsor many programs, including services for the poor and elderly, job 
training, small business finance and minority enterprise programs. Each region is 
governed by a policy board that includes elected officials, business leaders and 
citizen representatives. 

Because they are flexible, regions are often more creative in seeking innovative 
solutions to local problems. They frequently function as "laboratories for new ways of 
governing." 



!■ nifw ofocSf It 
oltea makes seas* H 
(oosolidate lertaia 
sanri<es ander tlM 
"■mbrella" of a 
regioMH devefopoMiit 
organiiation. For 
eiample, operating a 
landfill in (omplian<e 
witli federal 
regulations is betli 
eipensive and 
diffiiull. By pooling 
reso«r<es and 
expertise, several 
lounlies <aB join 
together to operate 
one regional landfill, 
avoiding dupli<ation 
of services, saving 
tax dollars, and 
ensuring a safe 
environment. 
Without a regionol 
appreaih, this type 
of solutioa would be 
impossible. 



347 



What services do 
regional development 
organizations 
provide? 



10N0MIC AMD 
DUSTRIAL 
DEVELOPMENT 

Business incubators 
help small businesses 
by providing support 
services such as 
clerical, word process- 
ing and financial 
management. The 
Economic Development 
Council of Northeastern 
Pennsylvania helped 
raise $1.4 million to 
acquire and convert an 
old building in Wilkes 
Barne into a business 
incubator. The 19 
tenants now employ 
115 workers. 



Jksi 



<^ 




Small businesses in 
eastern North Carolina 
often had trouble obtain- 
ing loans under S20,000 
until the Mid-East 
Commission began its 
Micro-Enterprise 
Program. Since 1989 
the Commission's 
revolving loan fund has 
made 38 micro-loans 
totaling over $500,000. 
creating or saving 130 
jobs in the region. 



jUSE AND 
ISPORTATION 
PUNNING 

Cities and counties in 
rural areas often cannot 
afford the staff to do 
comprehensive land use, 
zoning and transporta- 
■ tion planning. The 
Middle Georgia Regional 
Development Center in 
Macori has developed an 
overall plan for their 
seven-county area, 
which includes dozens of 
small towns. This plan 
helps local governments 
to determine which areas 
are appropriate for 
residential, industrial, 
or agricultural use. 



HNICAL 
ISTANCE TO 

LOCAL 

GOVERNMENTS 

Because stray animals 
were a major problem-for 
citizens and wildlife, 
the Kentucky River Area 
Development District 
{ADD} in Hazard 
organized a five-county 
Regional Animal Shelter 
on donated land. The 
facility, which is stafifed 
by volunteers from the 
local Humane Society, is 
helping to improve the 
quality of life in south- 
eastern Kentucky by 
removing unwanted 
animals from the 
countiYside. 




SOS WASTE 
llGEMENT 

Because ail the landfills 
in the region were 
neat capacity. Three 
Rivers Planning and 
Development District in 
Pontotoc, Mississippi 
began working with 
officials from several 
counties to organize a 
regional authority. 
Three Rivers worked 
with engineers to 
determine the best site, 
purchased the land, and 
is the administrative 
agency for the Regional 
Solid Waste Authority. 



348 






JrouRii 




II 

URU 
CONSERVATION 

Residents learned about 
gTDundwfUer issues 
through a creative pro- 
gram called GEM- 
WEST. With a grant 
from (he Kellogg 
Foundation, the West 
Michigan Shoreline 
R^onal Development 
Commission conducted 
workshops for teachere. 
business executives, 
local ofiBcials and the 
public to build aware- 
ness of the need for 
groundwater protecticm 
and environmental 
education. 



^ECREATION, 
OURISM kW 
HISTORIC 
PRESERVATION 

Wildlife Safkri, a 
- world-class 600 acre 
drive-through game park 
in < Oregon, needed loans 
til operate and expand. 
lh& CCD Business 
Development Corporation 
of Roseburg not only- 
helped the park with 
money from their revolv- 
' ing loan fund, but also 
secured foundation 
funding and Oregon stdte 
grants. Wildlife Safari 
is the largest tourist 
attraction in this 
distressed nual region 
which has lost many jobs 
because (rf the spotted 
owl controversy. 



9 



O 

Vjoe^Iaining 

Members of families 
with incomes below the 
poverty level receive job 
training and employment 
assistance from the - 
Southwest Arkansas 
FTanning and Development 
District in Magnolia. A 
variety of aid is available, 
including helping high 
school dropouts get their 
diplomas; cooniinating 
technical, computer, and 
on-the-job training; and a 
summer youth program. 
The Southwest Arkansas 
' District assists 2,000 
people each year. . 



CES FOR 
POOR AND 
ELDERLY 

The Region Nine 
Developnient 
Commission in Mankato, 
Minnesota established 
*'South Central Plus" 
with 15 other nonprofit 
organizations to coordi- 
nate service programs. 
South Central operates 
several projects includ- 
ing a regional Child Care 
Resource and Referral 
service, and programs < 
cultural sensitivity. 
Region Nine Development 
Commission is also the 
local Area Agency on 
Aging and provides 
nutrition, transportation, 
and other services for 
senior citizens. 



The Texas legislature 
recetidy chose the 
regional councils of 
governments (COGs) 
to coordinate the 91 1 
netwotk within the 
state. Accurate 
detailed maps with 
street addresses are 
essential for 91 1 
operators to quickly 
. identify the exact 
location of a medical 
emergency, fire or 
rescue situation. 
COGS provide up-to- 
date maps on a regular 
basis and help 
coordinate local 
911 efforts. 



349 




Why is a regional 
approach the most 
effective solution to rural 
problems? 

Regional organizations provide economres of scale and are the most efficient way to 
deliver services, particularly in areas with low population density and limited 
resources. Regional staff have the technical expertise to assess the region s overall 
resources and to help implement short and long term strategies. 

In addition to coordinating government services, regional development organiza- 
tions <ooperate with the private sector and with community-based nongovernmental 
organizations such as volunteer agencies, senior citizen groups, and civic associations. 
They identify community needs, and work with others to find a grassroots solution. 

Regional organizations also provide the link between federal and state programs 
and the local level where development actually occurs. Funding sources vary by region 
and reflect local priorities. Most regional organizations receive federal, state and local 
funds to carry out their mission. 

Strategic planning, infrastructure improvement and small business assistance are 
the three essential tools regions need for rural revitalization. The federal agencies that 
pnnide these types of assistance for rural communities include: 

DEPARTMENT OF AGRICULTURE 

RurgI Development Adminislralion • wgler, sewer, business and industry loons 

Forest Service ■ assiston<e to forest dependent areas 

DEPARTMENT OF COMMERCE 

Eranemic Development Administration ■ grants for planning, public worlis 
and revolving loon funds 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 
Community Development Block Grant Small Cities Program 

APPALACHIAN REGIONAL COMMISSION ■ regionol development programs 

SMAU BUSINESS ADMINISTRATION • small business loans, guarantees 

In addition to the above programs, there are numerous other federal 
agencies that provide funding and technical assistance to regional 
organizations and rural governments, including the Departments of Labor, 
Transportation and Health and Human Services. 



350 



How does NADO help 
regional organizations 
strengthen rural 
America? 

The Nati.iiial A»(i<i;[|i..ri i.l IVv.-h.pinciil Oi-jniyjli,.!!-, i\ \l)()| i> a |)iiMi,> irilrivsi 
gn)U|) l..iMi(le,l ill 10f,7 l(, li.-l|, |,n.lc"i..nal- ami l..ral i-lrcl.-d ofri,-iai> -liar.- inl.ariia- 
lioii an<l i<li-a-. Tli.' .i^ocialiuii i- llir Irailiri,;: aiUoi ali- Ir.i a rci;ir,nai a|i|iroai li 1.. 
.■(■ciK.inir and rHiiirmini^ tl,-M-l,,|,nirMl. \ VDO"- g.,al i~ In a^-^iin- llial all iinal . ili/n 
luiM' llic >aiiii' ac(fN> l(i rni|il(iMiii-iil o|i|u,iliinilii-- a- llinsc- ulii. Ii\i- iti tiiiian ana^ 
arHla((>rni.aralil.M|,ialilv(,riilr. 

NAIK) iiKHitl.-, inlcmiatidn and Icclniical a"i>laiHc lliioaj;li |nil.li.ali..M,. 
Iraininjiaiid |iiplic\ .iriaU--i>. \ \l>() \r»v.a u.'i-kl\ nc-nsl.-llta. ivpuiNim l,-d,-ial |h,I 
,\. anaK/f^ i.-scaivli. and liij^'lllighls su<-cc»lnl n-innal |ii(i^raMi.. I'lir a--... iahon 
>|M)ii>c>r> a spiiiin iciriri-ri-iiri- in W'a-liiiif;lnii and an anruial nii-.-linir in llic fall. 

Kacli \rar NADO i,-< <.^ni/,-^ ri,-ali\.' M-i..nal |.r(i|r(l> dniinj:h llir lnn,,xalinn 
Awards pnifiram. \uaiil-» innini; |iiiijccls arc -uniinaii/i-d ni a iiuKliralinn. |ii..\iditi- 
di'Vi'ldprniail |iraclilii)rii'rs willi inlornialioii almul iinicuali\(' a|ip]iia(lif ^ lo nnal pruli 
Icnis. \l llic annual ccirircrrnci-: auard wirnicr-. di^cn-^ dii-ir iiriiji-cls al lonndlalilc-;. 

[■\w \\\)0 K.->.-arrl) F.mndahcn ua- rMal.lwlird mi I').",;; I.. |a..vidf i.-,an li. 
cdncalidn and liaiiiinf;. Tlie IcuiiilaliiiM |Hcidurr> die Ki'iimmii Ucicli>imii-iil Dii^isl. 
a niurUldy iHiMnalio ,l,-\ rlnpnic-nl pinlcssHMiaU and Inial nlTuaals. 

The K.'.rar.h |-onnilali<.iial-.n,,.ndn.l-. 1,'rxolvni^ l,..an l-nnd \lana};r,nrnl 
Scniinars. nuinMains a ilalaliasc cil ifniiualiM' di-\ilii|iincnl |)iiii;ranis and lia> -piin-iir^ 
an .■xchanne lirlu.-cM drv rl,,|,nirnl |.n.lrsxi,,nal- ni dir I S and die ea>lcin C.-inian 
slali-olliiandrnliin,;:. 

N ADO's finals lur die Inlinv are: 

buildirif; pnilcssiiin.il c\pcilisc in nnal an-as 

liniadcniiif; llic visinn nl rural nllicials and cili/cns 

wnrkin;; uilli new partners >ncli as ruiiif^ov ennncnlal (iinani/.aliiins. eduealmnal 
and linaiu iai iiislilnlinns 

inipi(i\ irii; pdlievrnakcrs' undcrslandin;; nl rural needs 

pnininlint; cn\ i run menial I \ sciund eenniiinie ili\ ersijiealinn 




Rural Ameriia 
is in transition, from 
a land and resource- 
based economy to 
one engaged in 
trade and services 
with urban residents 
and the world. The 
National Association 
of Development 
Organizations' 
mission is to provide 
the information 
necessary for 
rural Americans 
to take control 
of their own destiny. 



351 



FOR MORE INFORMATION, CONTACT: 

AUCEANN WOHIBRUCK 
EXECUTIVE DIRECTOR 

NATIONAL ASSOCIATION OF 
DEVELOPMENT ORGANIZATIONS 
444 N. CAPITOl STREET.N.W. 
SUin 630 
WASHINGTON, DC 20001 

(202) 624-7806 
FAX (202) 624-8813 




ISADO 



Promoting economic detelopment in America s small cities and rural areas 



352 



Business Outreach Center 
Model for Community-Based Economic Development 



STATEMENT BEFORE THE HOUSE COMMITTEE ON 

PUBLIC WORKS AND TRANSPORTATION 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT 



by 

Rabbi Morris A. Shmidman 

Executive Director 

Council of Jewish Organizations of Boro Park 

JUNE 24, 1993 



COUNCIL OF JEWISH 

ORGANIZATIONS OF BORO PARK 

5224 13TH AVENUE. BROOKLYN, 

NY 11219 

TELEPHONE: (718) 436-1550 
FAX: (718) 436-4907 



353 



As we all recognize, small to mid-sized companies are the hidden heroes of 
stable local economies, job formation and regional growth. However, they often 
face almost impossible odds, particularly when their base of operations is in 
self-contained communities. In fact, America's most vulnerable entrepreneurs 
are those in culturally, linguistically or geographically isolated areas - in 
"hard-to-reach" and distressed communities, in other words, where business 
growth is handicapped by limited access to services. 

To make matters worse, the changing business environment of the last few years 
has only increased their burden. To survive, the small business sector along with 
potential entrepreneurs need informed and unobstructed access to top-quality 
sources of advise and assistance. How they are to get it, of course, remains the 
problem. Though technical assistance along with a host of incentive programs 
and services is unquestionably out there, it has not been reaching the people and 
firms it is meant to serve. Discouraged by ignorance, misinformation or red tape, 
they either do their best or flounder. 

It is clear that something must be done to improve the current service-delivery 
process. What is called for, in fact, is a new service-delivery model, one that 
strengthens the linkages between economic development agencies, business 
service providers, educational and training institutions and local entrepreneurs. 

The Council of Jewish Organizations of Boro Park has created a model which 
has already proven its merit in meeting these needs. The Business Outreach 
Center or BOC, was created in 1 989 as a demonstration project funded by the 
New York State Regional Economic Development Pilot Program. Since that time 
its viability as a model has been proven through highly successful replications in 

1 



354 



diverse community settings throughout New York City's five boroughs. The 
Business Outreach Center Network has been funded by a variety of city, state 
and federal sources and now serves six communities; representing wide ranging 
ethnic and cultural populations. In its three years of operation BOC has served 
more than six hundred small businesses and potential entrepreneurs. The 
partners of these strongly supported business outreach centers include all of the 
high profile city, state and federal economic development agencies, regional 
small business development centers, educational institutions, along with banks, 
utilities and other private sector service providers. 

The Business Outreach Center model presents a picture of an important strategy 
in supporting new business development, job retention, business expansion and 
small business stability. It is in fact the solution to the need for a new service 
delivery mechanism to guarantee that important resources reach the businesses 
and individuals which they are designed to support, and in turn to guarantee the 
future of local economies and the well-being of the nation as a whole which is so 
dependent on the success of the entrepreneur. 

The Business Outreach Center, or BOC is both easy to use and easy to sell. It 
can be described as a locally-based facility which acts as a small firm's 'one stop 
shop" for all essential services. Each BOC is sponsored by a prominent 
community-based organization and connected to high-quality, public and private 
economic development and business assistance providers through formalized 
linkage agreements. BOCs broker and coordinate individualized technical 
assistance on behalf of local business owners. Linkage agreements with service 
providers ensure a warm welcome for a BOCs clients upon referral. 



355 



A key feature of BOC is its staff, which must be conversant with the language 
and culture of their host community. BOC business counselors meet with clients 
to assess their needs and to tailor comprehensive plans of service. A BOC 
counselor's follow-up with both public and private sector agencies assures the 
success of the service-delivery process. 

With a BOC in the neighborhood or region, once marginalized entrepreneurs 
suddenly have access to information and services they might othenwise never 
have known about. In addition, because this assistance is being offered under 
the aegis of a trusted community organization, the likelihood it will be accepted 
and applied is greatly improved. 

This has been demonstrated time and time again in our Business Outreach 
Centers. A case in point is a small knitting mill which through BOC intervention 
not only relocated within the City but increased employment from 15 to 65 during 
peak season. BOC staff walked this business through its investigation of state, 
federal and private sector loan programs, introduced the owner to the York 
College Small Business Development Center which provided business planning 
resources, accessed on the job training programs and cut through City red tape 
to acquire a $50,000 relocation grant. In addition BOC hooked this business up 
to an organization called HIRE which places handicapped job applicants. 

BOC has forged a special relationship with SBA SCORE to provide export 
assistance to many of our Asian clients. As a matter of fact SCORE and the 
Pace College Small Business Development Center outstation their specialists 
one day each two weeks at a local BOC office. Why? Because BOC counselors 
prepare clients, speak the language of the clients and are trusted advocates. 



356 



Thus, more than small business assistance to a handful of disparate companies, 
BOC represents a business revitaiization strategy whose strength lies in its 
special emphasis on community-based outreach and on-going case management 
throughout the service-delivery process. As such, it has the potential to become 
a national model for helping small to mid-sized companies and individuals 
seeking to start their own businesses develop the access and know-how they 
need to take full advantage of the world of business assistance services and to 
make the transition to a higher performance workplace. 

In fact, BOC has been called the perfect economic development tool to reach the 
small business community. If the experience of hundreds of businesses is 
anything to go on, it is a claim that is hard to argue with. 

In supporting new entrepreneurs BOC has implemented a range of outreach 
workshops and connected individuals with entrepreneurial assistance programs 
initiated by a variety of agencies including the City's Department of Business 
Services, the American Women's Economic Development Corporation and 
Council's own Entrepreneurial Training for Refugees. Recently a home-based 
woman-owned design firm on Staten Island was linked to a Chinese Garment 
Association to develop samples for a major Minority Design show, the Black 
Expo. The business owner was able to create samples in under two weeks. Two 
BOCs collaborated to make this happen. 

I would like to stress that a BOC is neither a direct business service provider nor 
does it compete for the same funding dollars as the economic development 
community, public or private. It is in essence a broker. While BOC outreach is 
targeted to a community of entrepreneurs isolated due to cultural, linguistic or 
geographical factors, BOCs clients are not required to have a business within 



357 



delimited geographical boundaries. Therefore, BOC c£wi assist a firm to 
accomplish its development goals without any restriction on its mandate. This 
provides continuity and creates a trusted relationship for businesses as they get 
started, expand and develop. 

As I mentioned, the Business Outreach Center Network is a growing consortium 
of Business Outreach Centers now comprised of six centers. It is an alliance for 
small business empowerment. 

The BOC Networi< offers local economies the chance to benefit from shared 
resources. It represents a business revitalization strategy which promises to 
revolutionize the way local economies do business. 

The BOC Network is a model for community empowerment. It tackles concerns 
that transcends geographic and cultural differences, the survival of small 
business and the stability of local economies. It is a tool for minority business 
development, entrepreneurship, and job retention for isolated and economically 
distressed communities. When a series of Business Outreach Centers come 
together in a networi<, resources to individual centers dramatically increase. 

In New York we have seen many graphic examples of this benefit. Recently two 
recycling start-up companies were identified through BOC Staten Island and 
BOC in the Bronx. A long time recycling business in Queens, identified by BOC 
in Rockaway has become a resource for these new firms through our 
inten/ention. Wholesale markets for products have been Identified through BOC 
collaborations. BOC has connected inventors with technical institutions, and 
small service firms with federal, state and City procurement opportunities 
accessing the whole range of support services available to these businesses. 



358 



And I must stress that our clients would not have been able to access these 
resources without us, whether the reason - in the case of the exporter - was his 
lack of English skills, or - in the cases of our small manufacturers - their intense 
involvement with day-to-day operations leaving no time for outside investigation, 
or the very real cultural barriers preventing our clients from entering a 
government office to ask for services. BOC intervention is their only avenue to 
needed assistance. 

In light of our successful efforts to create a model which serves the needs of 
small business, new entrepreneurs and the economic development programs 
meant to serve them, I hope the committee recommends legislation to establish ■ 
BOC as an economic development model for the nation. 

In the package of our full testimony you can find a budget for a typical BOC as 
well as client statistics from our operations in New York along with other valuable 
information. I thank you for your consideration and for the opportunity to present 
this new strategy to your committee. 



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359 



BUSINESS OUTREACH CENTER Council o( jMvteh Organizations of Boro Pailc 



BACKGROUND - DEVELOPMENT 



* 1988-1989 Boro Park Business Survey funded by the NYC Office of Business Development 

In order to ensure the survival of the small business sertor and to expand employment 
opportunities for local residents, the Council of Jewish Organizations of Boro Park (COJO) 
identified economic development as a community priority and initiated a preliminary business 
needs assessment 

As a result of the 1989 Boro Park Business Survey, COJO developed the Business Outreach 
Center (BOC) model, an innovative approach to community based economic development, 
with a spedal emphasis on outreach, partnership and specialized access to economic 
development services. 

* 1990 Business Outreach Center established in Boro Park with a branch office in Far 
Rockaway, Queens 

In October 1990, BOC opened as a pilot project, supported by the New York State Regional 
Economic Development Partnership Program (REDPP) with additional support from 
Assemblyman Dov Hikind and Chase Manhattan Bank. COJO opened the Far Rockaway 
branch of BOC in partnership with the Rockaway Develoment and Revitilization Corporation 
and the Jewish Community Council of the Rockaway Peninsula. 

BOC brokers business assistance resources on behalf of small to mid sized companies. The 
measure of BOCs success has been its rapid growth as a model project for the delivery of 
community-based economic development services. Not only are other neighborhoods now in 
the process of developing their own BOCs, but have enthusiastically joined together with 
COJO to create a citywide BOC Network extending the collaborative model to a new 
dimension. 

* 1992 - BOC replication initiates multi-community BOC Networl( 

With the support of Senator Alfonse D'Amato, COJO expanded the BOC model with a 
Special Purpose Grant from the U.S. Department of Housing and Urban Development BOC 
has been replicated in communities which share in a traditional isolation from the mainstream 
business market. Like Boro Park, these diverse and largely minority communities face a 
variety of barriers to successful access to available economic development resources. 

With additional support from New York City Council, individual Council members, NYS 
REDPP, and corporate supporters, the BOC Network came into being. TTie network is 
comprised of six communities: Boro Park, Brooklyn; Rockaway, Queens; Flatbush, Brooklyn, 
Chinatown/Lower East Side, Manhattan; Hunts Point, the Bronx; and Staten Island. This 
collaboration promises to broaden understanding across community and ethnic lines while 
addressing the needs of Hasidic, Asian, Carribean-American, African-American, Eastern 
European, Hispanic and Haitain entrepreneurs. 



1301 51«t Street, Broofclyn, NY 11219 (718)436-2600 Executive Offices (718) 436-1550 



360 



B<i;>c 



BUSINESS OUTREACH CENTER 

A Collaborative Strategy for Economic Stability and Growth 

One of the Council of Jewisfn Organization of Boro Park's (COJO) most exciting 
ventures, the Business Outreach Center (BOC), brokers high quality business 
assistance services on behalf of its clients, small to mid sized companies. 

The BOC model, successfully tested in Boro Park and Far Rockaway, has 
recently been expanded to create a citywide Network consisting of six centers. 
Each BOC is sponsored by one or more selected local organization(s) in 
partnership with COJO. 

COJO has leveraged over three million dollars ($3,000,000) in City, State, 
federal and private funds to support the BOC Network. The Network will serve 
multiethnic business communities in each of the five boroughs of New York 
City. 

The six centers that comprise the BOC Network will broker services from the 
entire spectrum of established economic development and business 
assistance providers. The Network's mission is to channel these services to 
local business communities, extending access to existing sources of business 
assistance. 

BOC extends the ability of economic development agencies, business service 
providers, educational and training institutions to serve small to mid sized 
businesses in a cost effective way. It also offers the potential to implement the 
latest business technologies and practices to increase the competitiveness of 
the small business sector as demands for economy and quality continue to 
increase. 

The BOC model addresses the technical assistance gap that is limiting the 
growth potential of many small to mid sized businesses throughout the city. 
The BOC model goes beyond providing limited assistance to a handful of 
disparate companies. It is a business revitalization strategy that emphasizes 
community based outreach, case management and quality control throughout 
the service delivery process. 

While the primary purpose of BOC is to activate business assistance resources 
through improved access to existing service providers, the Network has 
additional potential to benefit individual communities and the City as a whole by 
serving as a tool for improved intergroup and intercommunity relations. 
Through the six center Network, BOC will target Caribbean, Asian, Hispanic, 
African American and Hasidic entrepreneurs. 



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361 



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The Advisory Board - Active Program Participation 

The BOC Network is operated under the guidance of an overall Advisory Board 
which includes representatives of economic development agencies, 
government, not-for-profit organizations, chambers of commerce, small 
business development centers, institutions of higher education, banks, and 
local business. Through collaboration with the Board and local Advisory 
Committees, each BOC can access a wide range of business assistance 
services for its clients. 

The Outreach Campaign - A Multi-Level Effort 

The Business Outreach Centers employ an extensive outreach campaign at the 
community level. The outreach campaign succeeds in its objectives through 
the participation of local agencies, banks and business associations. The 
success of the outreach campaign is also dependent upon the contributions of 
the BOC Advisory Board and local Advisory Committees as sources of 
information and expert presenters for scheduled outreach events. 



The Linkage Agreement - Formula for Cooperation 

The BOC interfaces with the whole spectrum of economic development 
agencies and business assistance service providers through formalized linkage 
agreements. The agreements designate services available at the linkage 
partner and procedures for client referral and follow up. Each linkage partner 
orients BOC staff to its service delivery procedures. 

The linkage agreement serves as the beginning of a mutually beneficial 
relationship and is revised as the relationship develops. 



The BOC - a Model for Community Empowerment 

The BOC can empower a community to join as a regional partner in the effort 
to strengthen business, promote business development and support the 
expansion of employment opportunities in its region. Entrepreneurs benefit 
by having access to staff and counselors who understand their business needs 
as well as their language and culture. The BOC model directs small to mid 
sized businesses to the most appropriate service providers based on 
individualized business assistance plans. Each BOC replication further refines 
the BOC technology as it is customized to diverse communities. 



362 



B<bC 



The BOC Network 



** The BOC Network comprises six centers linked electronically to broker high 
quality business assistance to selected target communities. 



** TTie BOC Network addresses concerns shared across geographic and 
cultural lines; the survival of small businesses and the stability of local 
economies. 



The BOC Network is rooted in the context of the local community, 

each center being sponsored by prominent community-based organizations 

with strong ties to the businesses and cultures represented within the 

community. 



** The BOC Network offers local economies the opportunity to benefit 
from shared resources. 



The BOC Network is a tool to address wide ranging business needs and to 
support minority business development. 



** The BOC Network mission is to continually expand capacity to serve 
business and to deliver new business technologies to its clients. 



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363 



B<bC 



BUSINESS OUTREACH CENTER Council of Jewish Organizations of Boro Parte 



B.O.C. AHD ITS LINKAGE PARTNERS 



Economic 

Development 

Agencies 



Local business 
professionals on 
business advisory 
board 



Not- f or-pro fit 
organizations 



Government 
Agencies 



Chambers of 

Commerce/Merchants 

Associations 



Both formal and informal linkages have been developed with: 

Government Agencies: N.Y.C. Department of Business Services, N.Y.C. 
Department of Employment, N.Y. State Office of Economic Development, 
US Small Business Administration, City Council President's Office. 

Economic Development Agencies: Brooklyn Economic Development Corp. 
Queens Overall Economic Development Corp. , Rockaway Development & 
Revitilizations Corp., Industrial Technical Assistance Corp. 

Small Business Development Centers: York College SBDC, Pace College 
SBDC, Kingsborough Community College SBDC. 

Chambers of Commerce/Merchants Associations: Brooklyn Chamber of 
Commerce, Chamber of Commerce of the Rockaways, Thirteenth Avenue 
Merchants Association 

Not-for-Profit Organizations: Council of Jewish Organizations of 
Boro Park, Jewish Community Coiincil of the Rockaway Peninsula, 
Maimonidies Medical Center, Opportunity Development Association, 
Columbia University Business School, UJA-Federation of Jewish 
Philanthropies, ORT America 

BanXs and Business: Brooklyn Union Gas, Con Edison, N.Y. Telephone, 
Dime Savings Bank, Chemical Bank, Citibank, N.A., Chase Manhattan 
Bank, Manufacturers Hanover Trust, Independence Savings Bank 
Community National Bank, Friedman Associates, Pinrose, Inc., Brucha 
Funding, Gelt Funding Corp., Roth and Company, Fairmont Funding, 
Federal Financial Services. 

1301 51st Street. Brooklyn. NY 1 1219 (718) 436-2600 Executive Offices (718) 436-1550 



B<!;>C 



364 



BUSINESS OUTREACH CENTER Council of Jewish Organizations of Boro Park 



BUSINESS OUTREACH CENTER 




AVERAGE ANNUAL OPERATING BUDGET 




Personnel : 






Director 

Senior Business Counselor 
Junior Business Counselor 
Administrative Assistant 




$ 43,000 
32,000 
27,000 
23,000 


Fringe Benefits : 




36,250 


OTPS: 






Rent and Utilities 

Printing 

Equipment 

Supplies 

Telecommunications 

Postage 

Travel 

Insurance 




20,000 
2,500 
4,000 
2,400 
2,400 
2,500 
1,500 
750 


Other : 






Seminars and Workshops 




3,500 


GRAND TOTAL: 




$200,000 


5224 1 3th Avenue. Brooklyn. New York 11219 (718) 436-2600 


Executive Offices (718) 436-1550 



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365 



BUSINESS OUTREACH CBiTBt Coundi Of Jewish Organizations Of Boro Park 



■BW TOSX CITY BOC ADVISORY BOASD 



Charles Auer 

Executive Director 

Staten Island EconoMic Development Corp. 

1 Edgewater Plaza 

Staten Island NY 10305 

718 442-4356 718 390-5206 



Robert E. Bailey 

President 

Brooklyn Chamber of Commerce 

333 Atlantic Ave 

Brooklyn NY 11201 

718 875-1000 718 237-4274 



Joan B. Bartolomeo 

President 

Brooklyn Economic Development Corp. 

16 Court Street 

Brooklyn NY 11201 

718 522-4600 718 797-9286 



Franklyn A. Berkowitz 
First Vice President 
Bank Leumi 
104-70 Queens Blvd. 
Forest Hills NY 11375 
718 896-8662 718 896-7500 



Robert T. Comer ford 

Vice President 

Chase Manhattan Bank 

2 Metrotech Center Ste. 5100 

Brooklyn NY 11201 

718 797-5941 718 797-3741 



Mary Cosgrove 

Director 

Citibank 

Economic Development Banking Ctr. 

1 Court Square, 40th Fl. 

Long Island City NY 11120 

718 248-9009 



5224 ISthANenue. Brooklyn. New Yorit 11219 ai8)436-2600 Executive Offices a 18) 436- 1550 



73-118 O - 93 - 14 



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366 



BUSINESS OUTREACH CENTER Coundl Of Jewish Organizations of Boro Park 



MBW YORK CITY BOC ADVISORY BOARD 



Joyce K. Coward 

Dir. Technical Assistance 

NYC - Department of Business Services 

110 William Street, 3rd Fl. 

New York NY 10038 

212 513-6458 212 618-8987 



Ira Davidson 

Assistant Vice President 

Pace University 

Small Business Development Center 

1 Pace Plaza 4th Fl. Rm 489 

New York NY 10007 

212 346-1899 212 346-1613 

Richard Drucker 

Assistant Deputy Commissioner 

NYS Department of Economic Development 

1515 Broadway, 51st Fl . 

New York NY 10006 

212 827-6142 212 827-6158 



Samuel Friedman 

President 

Friedman Associates 

3 50 5th Ave, 20th floor 

New York NY 10011 

212 502 - 3888 212 564-9729 



Sara P. Garretson 

Executive Director 

Industial Technical Asst. Corp. 

253 Broadway Room #302 

New York NY 10007 

212 240-6920 212 240-4889 



Bruce Herman 

President 

Garment Industry Development Corp. 

275 7th Avenue 8th Fl . 

New York NY 10001 

212 366-6160 212 366-6162 



5224 13thAvenue.BrooWyn.NewYork11219 018)436-2600 Executive Offices a